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Transfer Pricing
Companies are facing increased scrutiny over their transfer pricing policies - with compliance being a complicated and time-consuming exercise.
When could PwC’s transfer pricing services be relevant to you?
- You need assistance with supporting your existing transfer pricing policies and meeting documentation requirements for different transaction types.
- You are required to defend your transfer pricing policies to Tax Authorities or need assistance on dispute resolution matters and litigation.
- You are examining the impacts of reforms stemming from the Base Erosion and Profit Shifting project.
- Developing tax efficient and globally defensible transfer pricing models.
- Supporting transfer pricing policies by preparing Master Files, Local Files and Country by Country reporting templates.
With unrivalled transfer pricing expertise in South Africa, our team also draws upon global networks to offer you access to specialist knowledge and leading edge tools and solutions relevant to your industry.
How we can add value
- Transfer pricing planning
- Transfer pricing documentation
- Financial services transfer pricing
- Financial transactions transfer pricing
- Transfer pricing controversy
- Value chain analysis and transformation
Transfer pricing planning
Preparing for the future
Multinationals face heightened interest in their tax and transfer pricing positions. No longer just of interest to Tax Authorities, corporate tax positions have moved up the government and public agenda.
The arm’s length standard, the historic backbone of price-setting for intercompany transactions, is under attack. An increase in profit splits is expected. Tax departments are focused on substance, having the right facts to support tax positions, and managing their permanent establishments.
Transfer pricing planning enables a company to identify planning opportunities, design, implement and maintain a tax efficient and legally compliant structure to mitigate risk .
PwC can help you with:
- Working on a transfer pricing policy/strategy fit for the future.
- Helping to prepare for the significant changes expected from the OECD activity on Base Erosion and Profit Shifting and the Pillar I and II debate.
Transfer pricing documentation
The transfer pricing documentation and reporting requirements established by SARS and OECD mean a significant increase in the compliance burden for multinational businesses.
PwC’s transfer pricing professionals can help you:
- Review and identify gaps in your current transfer pricing documentation.
- Create a transfer pricing policy/strategy fit for the future.
- Streamline the process to develop robust, coordinated transfer pricing documentation through our Global Coordinated Documentation framework.
PwC’s Global Coordinated Documentation (GCD) service can help you:
- Analyse the potential implications of these new requirements and identify remedial actions to be taken prior to implementation.
- Analyse the output of your country by country report, including identifying how any risks could be addressed in, and reviewing the consistency of disclosures with, the Master File, Local File and local information returns.
Financial services transfer pricing
Financial institutions face distinct challenges compared to other multinationals, and their transfer pricing requires a tailored approach. Our financial services transfer pricing practice is designed to address the regulatory complexity, capital intensity, and operational considerations that characterise banks, insurers, asset managers, and other financial services entities.
Working at the intersection of international tax, prudential regulation, and financial services strategy, we advise across key areas including intragroup services, financing arrangements, permanent establishment profit attribution, fund management fee structures, the remuneration of captive management companies, and licence or service fees, amongst others. Our aim is to develop transfer pricing frameworks that are technically sound, aligned with regulatory requirements, and consistent with commercial objectives.
Supported by our Financial Services Transfer Pricing network, which spans multiple jurisdictions and includes local expertise, our team has experience across the financial services industry, including banking and capital markets, asset and wealth management, and insurance. This enables us to address the specific transfer pricing considerations within each sector.
Financial transactions transfer pricing
Our global breadth and country-level depth as a financial transactions transfer pricing (FTTP) network provides us with the tools and experience to deliver tailored, sustainable solutions in a dynamically changing global FTTP environment.
With respect to FTTP, our team understands the ambiguity in the arena due to the absence of direct regulatory guidance with respect to such transactions and has successfully developed technically robust and implementation ready support. The team includes specialists in all key markets with deep technical and controversy experience covering the entire spectrum of intercompany treasury transactions.
Transfer pricing controversy
Today’s tax controversy landscape represents a perfect storm of competing factors.
- Taxpayers must understand and comply with the complexities of tax reform.
- Increased enforcement efforts focus on large business tax compliance and international tax issues.
- Revenue constraints are causing state and foreign taxing authorities to challenge taxpayers more aggressively.
- Increased transparency is exposing taxpayers to more significant tax liabilities.
Companies should:
- Take steps to proactively manage tax disputes when they arise and creatively resolve them in a timely and favourable manner.
- Navigate regulatory practices and procedures to manage tax risk.
How PwC can help?
PwC’s transfer pricing team provides the following advice:
- ‘Getting ahead of the issue’ by proactively limiting tax risk.
- Streamlining/shortening the audit process by resolving issues at the lowest level.
- Analysing litigation hazards, developing defense strategies, and advocating for successful dispute resolution.
Value chain analysis and transformation
Value chain analysis
Companies are increasingly turning to Value Chain Analysis (VCA) to identify which activities generate value and how profits get allocated.
Value chain transformation
Companies are looking at ways to develop and implement an effective value chain management process.
Value chain transformation (VCT) solutions span across different industry sectors and different parts of the value chains.
PwC’s VCT practice guides you through the transformation process by:
- Providing insight on how other companies are handling the changing environment as well as strategies being implemented.
- Listening to your business objectives to gain an understanding of what your goals are.
- Evaluating your value chain management process and finding a path to improvement.
- Exploring value chain improvement options and co-developing the best solution for your company.
- Presenting tailored options that are aligned to your specific footprint and fact pattern.
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Prof. Osman Mollagee
Michael Butler
Corneli Espost
Emmanuel Otoo
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