Transfer Pricing

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In line with new developments in BEPS and the OECD regarding transfer pricing, both the IRS and CRA are increasing their scrutiny of cross-border transactions between related parties.

As a result, small and medium-sized businesses are experiencing an increase in transfer pricing audits. Our methodology is to group transfer pricing transactions into the following general areas:

  • Intangible payments, such as royalties 
  • Management and administration fees 
  • Intercompany loans
  • Sale of products 

Our experience is that the IRS and CRA have focused primarily on the first three areas when performing transfer-pricing audits. The CRA is applying the OECD guidance and requires companies to establish transfer pricing agreements that conform to OECD transfer pricing guidelines. These agreements must provide economic support of arm’s length terms, requirements to include OECD transfer pricing guidance to include the treatment of “cash boxes” affecting outbound financing of foreign subsidiaries of Canada multinationals and BEPS’ proposed simplified approach to low value-adding services. 

OECD Action 13 has been implemented and requires corporate groups with annual consolidated revenues exceeding €750 million to maintain:

  • Country by Country Reporting: Key information on all group members of the multinational 
  • Master File: Key information about the Multinationals Group’s Global Operations 
  • Local File: Information and support on the local countries intercompany transactions 

US reporting requirements are set forth in the Treasury Regulations and are also similar to the OECD transfer pricing.

Need Help? 

UHY Victor has expertise in dealing with Canada/US transfer pricing issues. Contact us for a consultation regarding your transfer pricing situation:

UHY Victor LLP Canada US Tax Team
(514) 282-0067

Additional Resources

Disclaimer: UHY Victor assumes no responsibility or liability for any errors or omissions of this site. The information used in this site is provided for general guidance. This article is not a substitute for professional legal advice.

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