The end of 2020 is approaching fast and for many multinational companies we notice that during the coming weeks/months, a yearly assessment of transfer prices is often performed. “Did our transfer pricing policy that was applied throughout the year result in an arm’s length outcome” is the key question. The question is one that arises on a yearly basis, but in 2020, a year that will go into history as one with exceptional events as a result of the COVID-19 pandemic, this question is of an even greater importance for many companies. Some multinational companies perform such assessments on a more frequent basis and as a result face more limited (or no) adjustment required at year-end. TP adjustments are important to manage as they assure arm’s length intercompany dealings. However, when changing intercompany pricing it is critical not to forget the impact of indirect taxes. After all, in certain situations, a TP adjustment may trigger an increase or decrease of customs duties and/or (import) VAT and may lead to some (compliance) issues in indirect taxes.
Source: tiberghien.com
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