Transfer Pricing 2025: A Deeper Look at Intercompany Loan Transactions, Transfer of Intangibles and Business Restructuring

Description

This timely and practical workshop is specifically structured to provide an in-depth understanding of Loan Transactions, Intangibles, and Business Restructuring in Transfer Pricing using real-life case studies, interactive discussions, and practical applications.

Programme Outline

Introduction to Transfer Pricing & Key Concepts

• Overview of Transfer Pricing principles under OECD & local regulations
• Evolution of TP rules post BEPS from 2015 onwards
• Importance of arm’s length principle
• The international yardstick to measure fairness across borders
• Key challenges in intercompany transactions
• Group entities do not work always like independent entities and how to tackle that

Loan Transactions in Transfer Pricing

• Introduction to Intra-group Financial Transactions
• Why related-party financing is scrutinized
• Historical misuse of related party financial transactions
• Hybrid mismatch and double deduction
• Loan versus deemed equity
• Impact on tax base erosion and artificial profit shifting
• Regulatory frameworks: OECD guidelines, local regulations
• Anti-BEPS measures introduced post 2020
• Evolution of financial transactions and two-sided analysis
• Safe harbour measures for reduced compliance burden
• Determining Arm’s Length Interest Rates
• CUP Method vs. Internal Comparable
• Best way to get there, and what taxpayers can do to achieve certainty
• Use of credit ratings in pricing loans
• Meaning and relevance of credit rating
• How is it done, using third party database or by using available financial data
• Implicit benefit from group association vs explicit benefit from guarantee
• Impact on arm’s length interest rate
• Risk-free vs. risk-adjusted returns
• Characterization of the entities involved using functional analysis
• Role and compensation of intermediaries for back-to-back loans
• Is interest free loan possible?
• Case Studies on loans
• International TP cases on intercompany loans
• Pre-requisite of having economic substance and rational before extending loan
• Implicit versus explicit guarantee and its impact on interest rate
• Loan Documentation & Compliance Best Practices
• What must be included in intercompany loan agreements
• A brief look at thin capitalization and earning stripping rules
• Ensuring alignment with international tax laws and avoiding penalties

Intangible Transactions in Transfer Pricing

• Defining Intangibles in a TP Context
• How intangibles are different than services, and how it can be mis-interpreted
• Types of intangibles (marketing, R&D, patents, trademarks, goodwill)
• OECD’s DEMPE (Development, Enhancement, Maintenance, Protection, Exploitation) framework
• Pricing of Intangible Transfers
• CUP, profit-split, and valuation methods
• Considerations for Hard-to-Value Intangibles (HTVI)
• Intragroup Royalty Arrangements & Challenges
• Setting arm’s length royalty rates including variable royalty linked to IP
• Substance requirements and economic ownership
• Responsible, Accountable, Consult and Informed (RACI) analysis
• Case Studies involving IP
• Excessive royalty payment for marketing IP
• Excessive royalty payment for technology IP
• Use of cost sharing arrangement/cost-contribution analysis for transfer of IP
• Correct profit allocation and use of methodology
• Documentation & Compliance Issues in Intangible Transactions
• Ensuring consistency with legal agreements (substance marries form)
• Challenges with tax authorities and possible pre-clearance to avoid audit

Business Restructuring & Transfer Pricing

• Introduction to Business Restructuring in TP
• Why companies restructure – key components of restructuring
• Common restructuring scenarios (centralizing functions, IP migration, supply chain changes)
• Tax & TP Considerations in Business Restructuring
• Defining the TP impact of restructuring
• Functional analysis pre and post restructuring
• OECD guidelines on compensating for restructuring events
• Valuation of Assets & Functions in Restructuring
• How to price a transferred business function and risks
• Exit charge/compensation and whether it is always applicable?
• Option realistically available
• Contractual assumption of risk v/s capacity to absorb the risk
• What if the restructure was due to government policies?
• In case of a continuous loss-making entity
• Case Studies on IP Migration, restructuring & Exit Taxation
• Shift in profit post restructuring
• Treaty shopping
• IP transfer made to look like service transaction to avoid withholding taxes
• Mitigating Transfer Pricing Risks in Business Restructuring
• Best practices for documentation and dispute resolution
• Possible approaches to avoid double taxation (e.g. APA)

Discussion & Q&A

• Use of ICAP initiative to obtain multilateral comfort with less administrative cost

What you will learn

• Get a practical understanding on intricacies of complex cross-border intercompany transactions beyond tangible goods and services
• To keep abreast with current global tax phenomenon and get practical pointers on managing potential TP risks
• Understand how best to obtain certainty on high value transaction and buy peace of mind
• Learn to avoid getting caught in the cross fire of the current trade war

Target Audience

• Tax Professionals
• CFOs and Finance Professionals
• Transfer Pricing Specialists
• In-House Tax Teams who are part of a group or a conglomerate that deals with intercompany transactions on a frequent basis
• Companies who have had past Transfer Pricing audit by IRAS on similar issues

Expert Speaker

Kunal Dutta

Kunal is an associate director of Transfer Pricing (Tax) at Crowe Singapore. He has more than 15 years of experience in TP compliance, consultancy and controversy for public-listed companies, multinationals institutions etc. Kunal has worked in India, Malaysia, and Singapore and has worked in the Big 4s prior to joining Crowe.

Kunal has worked with many high-profile clients, handling various aspects of TP issues. Some of his more recent projects include:

• Designing of pricing policy and charging mechanism
• Policy framing and designing of charging mechanism along with substance building for a company intending to shift its base to Singapore and optimize its tax base.
• Designing and review of operating model for Recirculating aquaculture systems (RAS)
• Working on the pre and post restructuring functional profile, RACI evaluation etc. for an IP migration
• Helping a large conglomerate to recharacterize custodial cost as shareholder cost
• Pricing mechanism for commodity-based derivatives
• Restructuring and IPO due diligence
• Pricing for an app-based e-cart