An effective intercompany transaction
framework requires four essential operational elements: 1) new intercompany transaction
identification and initiation; 2) selection of an appropriate TP methodology and operational readiness to ensure available data and processes to properly calculate intercompany charges based on the selected methodology; 3) effective financial record-to-report processes to invoice, book, reconcile, and cash-settle intercompany charges; and 4) a process to monitor, maintain, and analyze intercompany transactions
to ensure timely consideration and action to update key inputs and outputs of the end-to-end intercompany transaction
Marcel Kerkvliet, EY MENA International Tax Leader, said, "The increased level of interest by the tax authorities in transfer pricing adjustments mandates companies to revisit their intercompany transactions
and transfer pricing documentation.
As such, BWI would have added approximately USD 55m of incremental net sales to Masonite's North America Residential segment for the 12 months ended September 2018, after adjusting for intercompany transactions
As such, BWI would have added approximately $55 million of incremental net sales to Masonite's North America Residential segment for the twelve months ended September 2018, after adjusting for intercompany transactions
. The purchase price was $23 million, net of cash acquired, and is subject to customary post-closing adjustments.
IFS owned 99.3% of Interbank at year-end 2017, which represented approximately 75% of consolidated assets and contributed approximately 78% of consolidated net income before eliminations of intercompany transactions
Large Taxpayers' Office had carried out a transfer pricing tax audit regarding tax years 2007-2011 during 2012-2013, investigating if the intercompany transactions
between Nokian Tyres and its subsidiaries were at arm's length.
Adoption of stricter rules on intercompany transactions
The state impact, especially on the dividend exemption, may be mitigated in combined reporting states, where certain foreign dividends are eliminated as intercompany transactions
. Clearly, CPAs with clients that have international transactions need to closely scrutinize the state tax implications.
But be prepared to raise your equity and pare your banking limits if your business indeed has high intercompany transactions
and the clarity or comforts are not forthcoming.
This allows for intercompany transactions
to be easily identified and dealt with across platforms with common charts of accounts.
If a UAE-based company engages in intercompany transactions
with related parties in jurisdictions with transfer pricing rules, the intercompany transactions
will be subject to a new level of scrutiny under BEPS.