Tax authorities tighten transfer pricing rules
August 20, 2008
Taxpayers should take a more systematic approach to setting and documenting inter-company transactions as tax authorities worldwide seek to apply transfer pricing regulations more stringently, a new study says.
Advisers have identified a list of red flags now seen by tax authorities as possible reasons to investigate companies further. These red flags include unusually high profits or losses in a group company, corporate restructurings involving closures or reductions in operations, significant inter-company management fees, dealings with a group company in a tax haven, and location in a low cost country.
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