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Transfer pricing is the term used to describe the prices that related parties set for transactions among
themselves, and recently, both the IRS and CCRA (Revenue Canada) have increased their emphasis on examining this
practice. Transfer pricing adjustments can occur through any combination of these four types of transactions:
- Prices Charged to Related Parties for Raw Materials, Work-in-Process or Finished Goods
- Royalties Charged to Related Parties for Intellectual Property
- Service Fees Charged to Related Parties for Services Performed (e.g., Accounting, Legal, Marketing, or Management)
- Interest Rates Charged to Related Parties
The Internal Revenue Code contains a set of rules that are designed to ensure that related parties determine transfer
prices based on an arm's length standard, meaning at prices that non-related parties would agree to. Transfer pricing
rules and practices determine the allocation of income among tax jurisdictions arising from related party transactions.
Fortunately, Piascik & Associates is able to assist our international clients navigate the often complex requirements
of Section 482. Piascik & Associates offers its transfer pricing clients:
- Transfer Pricing Risk Assesment on a Product Line or Country-Specific Basis
- Complete Transfer Pricing Study
- Formulation of Comprehensive Documentation in Support of Transfer Pricing
- Identification of Potential Areas of Exposure
- Advance Pricing Agreements
- Valuations
- Tax Planning and Re-engineering
- What Documents Should Be Maintained
- How to Avoid Common Pitfalls with Transfer Pricing
- Why Documentation is Important
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