When related business entities operate across state or national borders, they must follow transfer pricing rules. These rules require intercompany prices for goods, services or intellectual property to be comparable to prices that unrelated parties would use in arm’s-length transactions. Taxing authorities may scrutinize pricing that shifts profits to lower-tax jurisdictions. Noncompliance can lead to back taxes, interest and penalties. If your company already operates with related entities across borders, or is planning to do so, choose appropriate pricing methods, create or update transfer pricing policies, and maintain supporting documentation. Contact us for more information.
