02 — Capability · BC-240.40
Transfer Pricing
Price the goods, services, financing and intangibles that move between group entities so that each jurisdiction gets an arm's-length share of profit and the documentation proves it.
- Intercompany Pricing
- Arm's-Length Pricing
In scope
- Transfer pricing policy and methods
- Benchmarking and documentation
- Advance agreements with tax authorities
Out of scope
- Booking and settling the intercompany charges themselves (see BC-210.30)
Decomposes into · 4
- BC-240.40.10Transfer Pricing PolicySet the method and margin for each type of intercompany transaction so operating entities price consistently without asking tax every time.
- BC-240.40.20Benchmarking & DocumentationPrepare the master file, local files and comparables studies that show the prices used are what unrelated parties would have agreed.
- BC-240.40.30Operational Transfer PricingMonitor actual intercompany margins against policy during the year and true them up before year-end instead of explaining them afterward.
- BC-240.40.40Advance Pricing AgreementsNegotiate agreements with one or more tax authorities that fix the treatment of major intercompany flows in advance, trading effort for certainty.