In the scope of transfer pricing, quality control is performed by means of a health check of the processes executed. It consists of evaluating the documentation prepared to support the position of the party-client, which has entrusted the responsibility of preparing the transfer pricing documentation. It is a well-known fact that, given their volume, many companies have teams dedicated to:
- Preparing transfer pricing policies
- Sustaining the main components of the value chain
- Aligning their material reality with points a. and b. above
- Preparing the documentation known as the local file or transfer pricing study
- Where applicable, preparing and submitting transfer pricing reports in the jurisdictions in which their entities operate
- Preparing and updating the master file of the group’s duties, risks, and assets associated with the value chain and income allocation policies
- Where applicable, submitting proposals for transfer pricing pre-agreements to local tax authorities for consideration
- Preparing country-by-country reports where annual income limits are exceeded, in accordance with BEPS 13 regulations
- Complying with the requirements of the administrative order phase, as well as specific or general tax audits with issues related to transfer pricing
- Providing technical support to legal teams responsible for representing and litigating transfer pricing for the proper defence of the interests of groups with multinational transactions
- Complying with the requirements of external auditors and competent authorities concerning transactions with related parties.
Many small, medium, and even large enterprises simply do not have or cannot afford specialised resources to evaluate such a broad array of transfer pricing issues and so opt to outsource some or all of the aforementioned processes and responsibilities. However, due to the complexity of the information to be analysed and prepared, as well as the short amount of time available to meet most of the obligations, it is necessary to establish quality assurance processes of core business aspects that may have critical consequences if not adequately addressed.Click here to learn more.