How to make transfer pricing policy of a group of related companies? Is there a template on transfer pricing policy? The issues are considered in the following.
First of all, it should be noted that the development of transfer pricing policy - a purely personal matter for each company group. It should take into account the peculiarities of functioning of the group, the state regulation of the relevant market (direct/indirect methods), regional location, the existing competition in the market, the consumer qualities of goods/works/services, which are sold, demand for products, currency fluctuations, tax rates, customs regimes and other economic conditions that affect the formation of prices for certain products.
Therefore, it is hardly possible to talk about the template of transfer pricing policy.
It is advisable to use the OECD Transfer Pricing Guidelines for Transnational Companies and the tax authorities, which are the basic methodological documents on transfer pricing issues, in forming of individual policy.
In our opinion, the transfer pricing policy should include the following sections:
1. Description of the group, the procedure for collection and detailed analysis of its activities. The procedure for the exchange of information between group members.
2. Business strategy.
3. Description of products, assortment.
4. Analysis of competition and demand for products.
5. Information on trademarks, certificates of conformity of products, etc.
6. Procedure for prices formation, sources of pricing information.
7. Procedure for discounting.
8. Accounting, accounting policy and reporting within the group.
9. Tax and customs regimes.
10. Procedure for interaction of structural subdivisions.
11. Determination of controlled transactions.
12. Procedure for studying of information on the counterparty (the list of required documents, determination of relatedness, residency, tax status).
13. Procedure for conclusion of contracts (essential conditions, distribution of responsibilities, functional analysis, pricing).
14. Procedure for treaty monitoring.
15. Procedure for monitoring of controlled transactions.
16. The choice of method of transfer pricing.
17. Procedure for formation of the reporting on controlled transactions.
18. Forms (templates) of documents.
The main advice: transfer pricing policy should be agreed with the company’s accounting policy and it should be entered at the beginning of a year, but the effectiveness of such a document depends on its strict adherence for all business transactions during a year.
