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Pricing policy
We recently had a question from a client where they asked if not having a pricing policy
between intercompany transactions would be acceptable by the tax authorities. This question
arose from the fact that some margins are added on the intercompany transactions and therefore
do not change the price for intercompany transactions without a legitimate reason. However,
since the purpose of deciding appropriate TP is dividing margins between the headquarters and
subsidiaries based on its functions and risks, the company has to review the TP periodically according
to the economic environment. In order to calculate an arms-length price, it is necessary to choose
appropriate comparative transactions. Therefore, in insistences involving companies, the price for
intercompany transactions isn't changed without a valid reason, and, thus, would be considered
unacceptable by the tax authorities.
between intercompany transactions would be acceptable by the tax authorities. This question
arose from the fact that some margins are added on the intercompany transactions and therefore
do not change the price for intercompany transactions without a legitimate reason. However,
since the purpose of deciding appropriate TP is dividing margins between the headquarters and
subsidiaries based on its functions and risks, the company has to review the TP periodically according
to the economic environment. In order to calculate an arms-length price, it is necessary to choose
appropriate comparative transactions. Therefore, in insistences involving companies, the price for
intercompany transactions isn't changed without a valid reason, and, thus, would be considered
unacceptable by the tax authorities.