Special Areas for Consideration: Financial Services and Transactions in US Transfer Pricing
Financial services and transactions are a crucial part of the global economy. However, as financial institutions operate across multiple jurisdictions, there is a need to establish a clear framework for transfer pricing and taxation. In the US, the Internal Revenue Service (IRS) has proposed regulations that aim to provide guidance on the taxation of global […]
Navigating Transfer Pricing in the Digital Economy: A Guide for US Businesses
On October 8th, 2021, 136 member countries of the OECD/G20 Inclusive Framework on BEPS (Base Erosion and Profit Shifting), including the US, joined the Statement on the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. The Statement finalised the agreement concluded in July 2020 to reform international tax rules. […]
Navigating US Transfer Pricing Investigations, Audits, and Adjustments: Understanding the Rules
Transfer pricing refers to the prices charged for goods or services sold between two related companies or entities, which are usually located in different countries. These prices can be manipulated to shift profits to lower-tax jurisdictions, thereby reducing the overall tax liability. Due to this, transfer pricing has become a major focus area for tax […]
Areas of Scrutiny in US Transfer Pricing Audits
Transfer pricing audits are an integral part of tax audits for multinational corporations that have a complex web of intercompany transactions with affiliates in different countries. Transfer pricing refers to the prices charged for goods, services, or intellectual property between different entities within the same corporate group. As per IRS regulations, these prices must be […]
Managing Transfer Pricing Risk: Understanding the Importance of Risk Assessment
Transfer pricing audits can be a challenging experience for any taxpayer, and it is important to have a clear understanding of the rules and procedures involved in the process. One of the key aspects of transfer pricing audits is risk assessment, which involves the identification of potential areas of risk and the development of strategies […]
Navigating the US Transfer Pricing Audit Timeline: What You Need to Know
Navigating the transfer pricing audit process can be complex and time-consuming for multinational organizations. Understanding the various stages, procedures, and timelines involved is essential for any organization to minimize the risk of tax assessments, penalties, and reputational damage. One of the first considerations for multinational organizations is the statute of limitations. A general statute of […]
US Transfer Pricing Series: Understanding Adjustments in Transfer Pricing Audits
Adjustment Process in US Tax Audits The United States Internal Revenue Service (IRS) is responsible for enforcing tax laws and regulations in the country. One of the primary tools at its disposal is conducting audits to ensure that taxpayers are accurately reporting their income and paying the correct amount of tax. In the course of […]
Understanding Transfer Pricing Penalties in the US
One significant aspect of transfer pricing regulations is the imposition of penalties for non-compliance. In the US, transfer pricing penalties are not a part of Section 482 or the Treasury Regulations enforcing it. Instead, these penalties are part of Section 6662 concerning penalties imposed for the underpayment of income tax resulting from inaccuracy-related misstatements of […]
Understanding Penalty Relief in US Transfer Pricing
Penalty relief is a provision that can be used by taxpayers to avoid or mitigate the financial penalties imposed by the Internal Revenue Service (IRS) for failing to comply with tax regulations. One example of such relief is the waiver of penalties for transfer pricing under Section 6662 of the US tax code. Under this […]
Understanding Treaties in Force and the Application of the OECD Model in US Transfer Pricing
Double taxation is a common issue that arises in cross-border transactions. The United States has entered into over 65 comprehensive double tax treaties with other countries to prevent double taxation and promote international trade. These treaties require the US to offer foreign tax credits to offset double taxation, and the US has included corresponding provisions […]