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Description
Transfer pricing consists of four broad categories of transactions: Tangible, Intangible, Services and Intercompany financing. Of these, Trade transactions are one of the most common, and easiest intercompany transactions. With respect to the other three categories, it is often difficult to accurately estimate the “arm’s length nature” of these transactions. In addition, tax authorities are particularly concerned with these transactions as the payment of such fees are typically considered to be eroding the tax base in their jurisdiction. There is currently very little guidance with respect to intercompany financing. However, the Transfer Pricing Guidelines on Financial Transactions issued by the OECD in September 2018 as part of BEPS Action Plans 8 – 10 is likely to be finalized very shortly. Our highly experienced Trainer will share with you the changes coming our way, and the likely implications.
With globalisation, these transactions are on the rise, which raises a dichotomy of views between the taxpayer and the tax authority. Hence, rightly structuring and managing transfer pricing exposures that arise from intercompany service, financing and royalty transactions is a key challenge for the regional finance team to address.
This workshop is designed specifically to give Finance and Tax Professionals a practical understanding of how to handle the transfer pricing aspects of cross-border intercompany services, financing and royalty transactions.
Furthermore, given that any related party transaction needs to be evaluated from a payer and payee perspective, this programme will also cover the transfer pricing treatment of these cross-border transactions across selected countries such as China, Indonesia, India and Malaysia.
Finally, we will use this workshop to provide all participants with key updates/ developments on transfer pricing.
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
- Get practical pointers on managing the transfer pricing exposures arising from intercompany services and royalty transactions from a transfer pricing documentation perspective
- Learn the best practices on how to mitigate transfer pricing risks
- Be updated on key transfer pricing issues from the region
Programme Outline
Examining the Importance of Cross-Border Intercompany Services, Loans and Royalties
- Why are these forms of intercompany services increasingly important to the overall functioning of the company group?
- Why are tax authorities’ increasingly scrutinising these cross-border intercompany transactions?
- Review of key BEPS related changes to transfer pricing guidelines and its impact on intercompany services and royalties
- 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
A Discussion on Tax Authorities’ Positions on Cross-Border Intercompany Services: A Transfer Pricing Perspective
- Evaluate routine support services and its cost pooling arrangements from the Singapore Transfer Pricing Guidelines
- Examining recent guidance provided by tax authorities in India / China / Malaysia and Indonesia on cross-border intercompany services
Understanding Cross-Border Intercompany Royalties
- Overview of the various royalty models
- Understanding the applicable transfer pricing methodologies
Guidance on Intangible Property from Base Erosion and Profit Shifting (“BEPS”) Action Plan
- Understanding of the Development, Enhancement, Maintenance, Protection, Exploitation (“DEMPE”) activities
Understanding Intercompany Financing Transactions
- Overview of the intercompany financing models (e.g., intercompany loans, cash pools, finance and treasury centres)
- Understanding the applicable transfer pricing methodologies
- Benchmarking strategies
- Understanding the key changes proposed by the OECD Discussion Draft on Financial Transactions
Regional update on transfer pricing
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 has more than 17 years of transfer pricing consulting experience.