TRANSFER PRICING
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F A Q
Which Transactions Are Subject to Transfer Pricing Rules?
Transfer pricing rules apply to transactions between Related Parties and Connected Persons. Such transactions must be carried out on terms comparable to those that would apply between independent parties.
Are All Companies Required to Prepare a Master File and Local File?
No. The requirement to prepare full transfer pricing documentation depends on the applicable criteria. However, transfer pricing rules and the arm’s-length principle may still apply to companies that are not required to prepare a Master File and Local File.
What Is the Arm’s-Length Principle?
It is the principle that the terms of a transaction between related parties should be consistent with the terms that independent parties would agree under comparable circumstances.
Do Related-Party Transactions Need to Be Disclosed When Filing a Corporate Tax Return?
Depending on the transactions and applicable requirements, the company may need to disclose information about Related Parties and Connected Persons as part of its tax filing.
What Should a Company Do If It Has Many Intragroup Transactions?
The company should identify the related parties, classify the transactions, review the pricing methodology used, and determine the scope of required documentation. A systematic transfer pricing process can then be established for ongoing reporting.