The proliferation of transfer pricing compliance and documentation requirements, combined with a dramatic increase in the volume and complexity of international intra-group trade and the heightened scrutiny of transfer pricing issues by tax authorities, makes transfer pricing documentation one of the top tax compliance priorities on the agendas of both tax authorities and businesses.
Advance Pricing Agreements (APAs) are generally bi- or multilateral; they also include agreements between the taxpayer and one or more foreign tax administrations under the authority of the mutual agreement procedure specified in income tax treaties. The taxpayer benefits from such agreements since it is assured that income associated with covered transactions is not subject to double taxation by the IRS and the relevant foreign tax authorities. It’s possible that a taxpayer may negotiate a unilateral APA involving only the taxpayer and the IRS.
The Functional Analysis provides the factual foundation for determining the extent and economic substance of the related party activities that are undertaken by a renderer on behalf of a recipient. This analysis is a method of finding and organizing facts about a business in terms of its functions, risks, and assets in order to identify how these characteristics are divided between the entities involved and transactions under review.
In general, a Cost Sharing Arrangement (CSA) is an arrangement by which the participants agree to share the cost of developing one or more intangibles (referred to as “covered intangibles” or “cost shared intangibles”) that will be separately exploited by each of the participants.
In the United States, CSA is governed by Treas. Reg. §1.482-7. By participating in a CSA, each participant obtains a separate interest in such cost-shared intangible. Consequently, each participant may separately exploit the cost-shared intangible in a manner consistent with that interest without owing additional compensation to the other participants.
At Marshall & Stevens, we use market-based pricing techniques, benchmarking studies, and other accepted valuation methodologies to incorporate inter-company pricing policies supported by established valuation theory, regulations, and well-established economic principles.
The result is a sound valuation for transfer pricing solutions that meet our clients’ business objectives, as well as the arm’s length requirements imposed by national tax authorities. Our valuation reports are prepared in conformance with the Organization for Economic Cooperation and Development (OECD) and applicable Treasury Department Guidelines.
Our Transfer Pricing team collaborates with our internal multi-disciplinary professionals to provide the value analyses and fresh independent opinions to fiduciaries, financing sources and investors for public and private company transactions.
Marshall & Stevens provides Fairness and Solvency Opinions, valuation analyses, investigative accounting, and expert witness services to assist public and private clients with their important transactions and litigation matters.
