Transfer Pricing is misunderstood – A perspective

What is the first thing that comes to your mind when you hear Transfer Pricing? 

I bet you would say that it is yet another complex tax compliance that should be adhered to by multinationals. 

This is where the entire misunderstanding starts, where we reduce the importance of a subject to mere compliance.

1.    Do you ever equate transfer pricing to business planning? 

2.    Have you ever considered transfer pricing principles to your business to track industry and growth? 

3.    Have you ever thought of transfer pricing as an effective tool in your business?

If the answer to the above questions is ‘No’, then you are losing a significant opportunity to steer your business with the following characteristics:

1. Eases the way you do your business when you are in complete control of your functions and distribution of risks
2. Track comparative profitability in the industry
3. Benchmark your business progress to the industry standards
4. Undertake in-depth comparative analysis with a special purpose study on competitors
5. Structure your business to be tax-friendly and tax optimised
6. To build holding structures that will help you minimise global tax impacts during your exit strategies
7. Know which element in the supply chain contributes to your profitability
8. Expansion to international jurisdiction with a clean and clear path of growth 

All the above characteristics are found in a business that understands the importance of transfer pricing over compliance. If transfer pricing is only compliance and documentation, why there would be complex books written on this topic? Why would global institutions like OECD and the UN be even interested in this subject? 

Who can gain by using transfer pricing as an effective business and planning tool?

1. Start-ups
2. Promoter driven companies
3. Mid-Sized Companies and small companies who want to undertake cross border business
4. Companies looking at tax optimisation and risk minimisation
5. Multinational companies

Transfer pricing is all about business, and it is the way to undertake global business. Once we know this mantra, we will be able to scale any business to greater heights. 

To know how transfer pricing can change the face of your business, reach us at info@transprice.in.