Transfer pricing

The question and deliverable

We map controlled transactions, gather supporting agreements and financial data, and coordinate the analysis and documentation appropriate to the assignment. Policy design and year-end compliance are distinguished.

Build a transaction register by counterparty, service or product, currency and period. Record who performs the work, makes commercial decisions and bears the relevant costs. The resulting fact map helps identify which transactions need distinct analysis and which questions require interviews with the operating team. It also exposes differences between a written group policy and the arrangements actually followed.

Evidence to prepare

• Group chart
• intercompany agreements
• transaction values
• segment information
• functional interviews
• cost allocations
• prior studies.

Reconcile the transaction register to the books and identify credit notes, year-end adjustments and balances carried forward. For segment information, retain the allocation basis and the bridge back to the entity accounts. Prior studies are useful context, but changes in the business model, responsibilities or transaction mix need to be documented rather than carried forward without explanation.

A fact that can change the analysis

A cost-plus invoice should be supported by the agreed cost base and actual services. A percentage in a contract cannot repair an unexplained allocation.

For example, a shared-service allocation may use employee headcount while some costs relate exclusively to one recipient. Show the directly attributable costs separately and explain how the remaining pool is allocated. Retain evidence of the services delivered and the source of the allocation data. Whether the resulting arrangement supports a particular pricing conclusion requires analysis of the actual facts.

Engagement boundaries

Benchmarking databases, certification, foreign documentation and dispute support are separately specified.

The written proposal confirms the taxpayer, period, deliverables and fees. Identify any payment, response or appeal date at the start.

Agree whether the output is a transaction inventory, functional analysis, policy recommendation, documentation pack or support for a specified reporting obligation. Identify separately who will obtain external comparison data and who is responsible for any required certification or submission. The handover lists assumptions, missing evidence and implementation actions; preparing documentation does not promise acceptance by a tax authority.