Overview of Transfer Pricing Compliance in India
Transfer pricing compliance refers to the process of ensuring that multinational corporations (MNCs) comply with regulations related to transfer pricing. Transfer pricing refers to the pricing of goods or services transferred between related parties within an MNC, such as between a parent company and its subsidiary.
Importance of Transfer Pricing Compliance
Governments around the world are concerned about transfer pricing because it can be used to shift profits from higher-tax jurisdictions to lower-tax jurisdictions, resulting in lower tax revenues for the countries where the profits were generated. To address this concern, many countries have implemented transfer pricing regulations that require MNCs to follow certain guidelines when pricing transactions between related parties.
Transfer pricing compliance involves ensuring that MNCs comply with these regulations and guidelines, which can include providing documentation to support the pricing of related-party transactions.
How Can You Manage the Transfer Pricing Documentation?
The transfer pricing compliance experts have said that businesses can use a tool for transfer pricing documentation, which will streamline internal processes.
These types of tools can also generate the reporting packages that support the needs of the transfer pricing documentation under the BEPS Action 13.
The BEPS Action 13 is a report that contains all the revised standards of the transfer pricing documentation, which consists of a template, a master file, and a local file.
Transfer Pricing Compliance Allows CbC Reporting
The CbC or Country-by-Country reporting tool is developed to help generate the data on CbC reporting. This type of reporting is required under BEPS Action 13. With the help of this tool, you can get your CbC reporting information within a matter of minutes.
Transfer Pricing Enactment and Intercompany Success
When it comes to operationalizing the policies of transfer pricing, it might be a bit challenging for all multinational firms. That’s why it’s crucial to utilize a scalable and structured framework, which can enhance the implementation of transfer pricing.
Furthermore, it can also help build integrated processes and systems across the business and tax operations and units effectively. You can certainly opt for a much more flexible approach, which can help you create sustainable practices.
With the help of these practices, you can easily report, monitor, and even execute all intercompany-related transactions. On that note, let’s look at the management of financial transactions that plays a crucial role in transfer pricing.
Transfer Pricing: How to Manage Monetary Transactions?
If you wish to automate and simplify tax and treasury workflows, you can easily do so with the help of intra-group financing platforms. These platforms can help you by managing the documentation, pricing, and managing all financing arrangements of the intra-group.
Intra-group financing platforms can help in various ways, such as:
Replace all the manual work related to documenting and entering all the “T&C” or Terms and Conditions of the transactions.
Generate all the TP documentation and loan agreement reports.
Determines the credit rating estimates for all the group organizations.
Conducting all the needed adjustments.
Retrieve all the market data from the real-time connection or from 3rd-party monetary platforms/databases.
It’s critical to have reasonable knowledge about transfer pricing and its compliance. You can also gain support on transfer pricing compliance from BDO India.