A Practical Guide to Managing Cross-Border Transfer Pricing Risks: Intercompany Services, Financing and Royalties
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Description

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As businesses expand their digital footprint, there has been a recent growth in intercompany services and royalty transactions. The COVID-19 pandemic has also resulted in an increase in intercompany financing arrangements as multinational corporations decided to source funding internally rather than increase the cost of borrowing externally.

In light of these changes, the Inland Revenue Authority of Singapore (“IRAS”) and the OECD have updated their transfer pricing guidelines to provide additional guidance on how these related party transactions should be analysed from a transfer pricing perspective.

This workshop is designed specifically to give Finance and Tax Professionals a practical understanding of how to manage cross-border transfer pricing risks in relation to intercompany services, financing, and royalty transactions.

The recent guidance from IRAS as discussed in the Singapore Transfer Pricing Guidelines, 6th edition, as well as the OECD will also be discussed.

Programme Outline

Examining the Importance of Cross-Border Intercompany Services, Loans and Royalties

  • Updated guidance from OECD and IRAS on intercompany services, loans and royalties
  • Why are tax authorities’ increasingly scrutinising these cross-border intercompany transactions?
  • Key considerations for the structuring of intercompany services, loans and royalty transactions in managing transfer pricing risks

Transfer Pricing Considerations for Cross-Border Intercompany Services

  • Transfer pricing methods applicable to intercompany services
  • Applying the benefits test for intercompany services
  • Determination of cost base
  • Determination of arm’s length pricing
  • Evaluate routine support services and its cost pooling arrangements from the Singapore Transfer Pricing Guidelines
  • Preparation of transfer pricing documentation and economic analysis to support the arm’s length nature of these transactions.

Understanding Cross-Border Intercompany Royalties

  • Overview of the various royalty models
  • Understanding the applicable transfer pricing methodologies
  • Understand the Development, Enhancement, Maintenance, Protection, Exploitation (“DEMPE”) process and how this framework should be applied

Understanding Intercompany Financing Transactions

  • Overview of the intercompany financing models (e.g., intercompany loans, cash pools, finance and treasury centres)
  • Discussion on recent guidance from OECD and IRAS on intercompany financing arrangements
  • Understanding the applicable transfer pricing methodologies
  • Benchmarking strategies
  • Impact of discontinuation of LIBOR for benchmarking

A Recap on Key Takeaways: Transfer Pricing Implications on Cross-Border Intercompany Services, Financing and Royalties

What you will learn

At the end of this workshop, you will:

  • Understand how cross-border intercompany services, financing and royalties should be structured from a transfer pricing perspective
  • Understand the key changes in the Singapore and OECD Transfer Pricing Guidelines on how these transactions should be priced
  • Get practical pointers on managing the transfer pricing exposures arising from intercompany services, financing and royalty transactions from a transfer pricing documentation perspective
  • Learn best practices on how to mitigate transfer pricing risks

Expert Speaker

Dr Sowmya Varadharajan is a Director at IC Advisors Pte Ltd, a firm that helps companies design and document appropriate transfer pricing strategies and approaches for their related party transactions. Having been trained in the U.S. on international tax and transfer pricing issues through blue-chip corporations, Sowmya now applies her transfer pricing training to transfer pricing issues in the Asia Pacific region. Sowmya has extensive experience in the high technology/semiconductor as well as pharmaceutical/biomedical industries.

In addition to transfer pricing, Sowmya is also skilled in IP valuation. With the growth in transfer pricing related audits in the Asia Pacific region, Sowmya has assisted clients in India, China, Malaysia, Indonesia and Singapore in defending their transfer pricing arrangements with tax authorities.

Sowmya is an economist with Ph.D. in Economics from Cornell University and more than 16 years of transfer pricing consulting experience.

  • Feb 22
    • Early Bird 15% Discount - Apply Promotional Code: EBF15 $545.70 incl. GST (7%)
    • $642.00 incl. GST (7%)
    Tue, 9:00 AM - Tue, 5:00 PM Hotel Venue to be Advised
    • Early Bird 15% Discount - Apply Promotional Code: EBF15 $545.70 incl. GST (7%)
    • $642.00 incl. GST (7%)
    • PD hours: 7

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