Transfer Pricing

We support a wide spectrum of intra- group transactions that require pricing justification across Asia:

• Sale or purchase of goods and raw materials
• Intra- group service arrangements and management fees
• Royalties, licensing, and intangible property transfers
• Intercompany financing or guarantee agreements
• Cost- sharing and allocation of overheads across subsidiaries

Thresholds vary significantly across jurisdictions. For example, China, India, and Indonesia require documentation when specific revenue or transaction benchmarks are crossed. We monitor jurisdiction- specific rules and advise clients when documentation becomes mandatory to avoid non- compliance penalties.

Benchmarking studies serve as a key defense tool by showing that your pricing aligns with that of independent third parties. We select comparable companies, apply appropriate filters, and document financial ratios that demonstrate consistency with accepted margins under OECD or local transfer pricing guidelines.

Reporting obligations depend on global consolidated revenue and local implementation of BEPS Action 13.

To help navigate this, we:

• Identify which group entities exceed jurisdictional thresholds
• Prepare local notifications and filings
• Ensure alignment with master file and local file deadlines
• Monitor deadline changes across Asia- Pacific’s evolving TP landscape

Authorities tend to focus on inconsistencies, abnormal margins, and aggressive structuring. Common triggers include:

• Persistent losses or fluctuating profits in subsidiaries
• Unreasonable base erosion and profit shifting
• Unexplained year- on- year pricing changes
• Significant IP payments from low- risk entities

We help reduce audit risks by reviewing intercompany pricing and identifying gaps in supporting evidence.

Yes, the benefits of APA can be summarized as follows:

• Reducing tax uncertainty: APA helps taxpayers and tax authorities to reach an agreement in advance on the transfer pricing method. This can effectively reduce the uncertainty of tax liability, enabling taxpayers to better predict their tax payments and avoid potential tax disputes and adjustments in the future.
• Enhancing tax compliance: By clarifying the tax treatment of specific transactions through APA, taxpayers can more accurately understand their tax obligations, which is conducive to enhancing their compliance with tax laws. At the same time, it also helps tax authorities to better supervise and manage taxpayers' tax payments, improving the overall tax compliance level.

While timelines vary by jurisdiction, for example, bilateral APAs typically take 18–36 months to finalize. We assist with pre- filing consultations, preparation of documentation, and coordination with tax authorities throughout the negotiation.

MAP is preferable when taxpayers seek to resolve double taxation across jurisdictions through negotiation rather than courtroom litigation. It is especially effective in cross- border disputes where treaties provide for dispute resolution. We support clients in MAP submissions, coordinating with both home and host country tax authorities.

We offer ongoing TP maintenance services that help clients remain compliant amid evolving market conditions:

• Annual review of intercompany agreements and pricing structures
• Updates to benchmarking sets and economic analyses
• Monitoring of local regulations, trade tariffs, and treaty updates
• Internal training and policy documentation refreshes for finance teams

Penalties vary but can include monetary fines, tax surcharges, or disallowance of deductions. For example:

• India imposes penalties for non- filing equal to 2% of the transaction value
• Indonesia may recharacterize income and apply surtaxes
• China allows retrospective adjustment with added interest

Our role is to help clients avoid these outcomes through timely and robust documentation.