Our experts assist clients in drawing up a transfer pricing policy which constitutes a consistent, standardised and transparent set of rules and principles governing transactions between associated entities, taking into account the various levels of management envisaged within the capital group’s organisational structure.
The main objective of the transfer pricing policy is to establish, in a manner appropriate to the company’s objectives and tax regulations, the rules governing transactions between related parties – through the standardisation of the transaction execution process, standardising the valuation of transfers of assets or services, and standardising the rules for monitoring the execution of transactions. Responsibility for implementing these processes lies with the management of the group, the management of individual related parties, and staff in the finance, operations and HR departments.
The procedure for drawing up the transfer pricing policy shall include at least the following points:
- an analysis of the group’s strategy and the breakdown of that strategy into tactical and operational objectives,
- an analysis of the capital group’s organisational structure and internal management subsystems,
- an analysis of data relating to historical and current transactions,
- an analysis of transactions that may occur in the future,
- an analysis of internal procedures relating to internal control and risk management,
- an analysis of legal regulations in the country where the group is headquartered and in the countries where the policy will be implemented,
- an analysis of the cost account,
- analysis of the remuneration system for senior management of affiliated entities,
- analysis of the system for assessing the individual performance of affiliated entities,
- preparation of an effective procedure for managing transaction documentation,
- preparation of a system for settling and monitoring the execution of transactions
and many others, all aimed at ensuring the proper functioning of the transfer pricing policy. We would be happy to provide detailed information on the development of a transfer pricing policy. Please feel free to contact our advisors.