Transfer pricing remains a critical factor in international tax planning and compliance. Robin Park of SingerLewak and Amit Maheshwari of AKM Global offer their expert perspectives.
Understanding Transfer Pricing
Transfer pricing refers to setting prices for transactions between related business entities within a multinational organization. The goal is to meet the “arm’s length” standard—ensuring transactions are treated as if between unrelated parties.
Key Insights from Industry Experts
Robin Park emphasizes that transfer pricing ensures consistent treatment of intercompany transactions and prevents profit manipulation. Amit Maheshwari adds that global tax authorities now heavily scrutinize transfer pricing under frameworks like the OECD guidelines and U.S. Internal Revenue Code Section 482.
Regulatory Frameworks and Documentation
In India:
Local file
Master file
Country-by-Country Reporting (CBCR)
In the U.S.:
Documentation isn’t required unless audited, but preparing it offers penalty protection under Section 6662.
Strategic Evolution for Businesses
Modern regulations require profit allocation to reflect real economics and risk profiles. Companies must regularly review and update documentation to remain compliant.
Proactive Tax Planning
Optimizing functions and assets across borders can reduce total tax costs and improve repatriation of profits. However, businesses must align transfer pricing with customs declarations and licensing considerations to avoid withholding tax and compliance issues.
M&A and Integration
Transfer pricing plays a key role in post-acquisition strategies—particularly when restructuring supply chains or integrating global teams.
Documentation Best Practices
Update every 1–3 years based on business changes or macroeconomic shifts. Documentation must be complete, consistent, and aligned with OECD standards to avoid penalties.
