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Transfer Pricing Planning

GRANIT offers minimising fiscal/financial risks arisen from transfer pricing and international taxation.

Transfer pricing is the price at goods or services, tangibles or intangibles transferred between related persons or associated / controlled enterprises. Disguised profit distributions via transfer pricing are not accepted as tax deductible and subjected to taxation adjustments not only for corporate income tax purposes, but also for profit distribution and VAT.

International business taxation and transfer pricing is at the top taxation agenda for not only multinational companies, but also governments.

In case, transfer pricing does not reflect market forces, free market prices and the arm's length principle, the tax liabilities of the associated enterprises and the tax revenues of the host countries could be distorted via transfer pricing. Governments need to ensure that the taxable profits of multinationals have not been manipulated and the profits are not distributed in a disguised manner via transfer pricing. However, multinationals are often faced with risks of double taxation sourced from the determination of arm’s length remuneration for their cross-border transactions with related enterprises. Transfer pricing does not necessarily mean that profit distribution in disguised manner via transfer pricing.

As a result of increased knowledge sharing and harmonisation studies among the world-wide tax authorities, and audit scrutiny by the national tax authorities; it is vital to multinational companies to implement accurate, consistent and defensible optimal transfer pricing/advance pricing policies and procedures as well as effective tax planning, valuation and risk management complied with the transfer pricing rules.

As a “complex tax rate optimisation work” at the core, transfer pricing always exposures financial risks which may lead to rather costly cross-border disputes with world-wide tax authorities. There are always similar Transfer Pricing risks for domestic group companies of all sizes.

As GRANIT, we mainly focus on;

- BEPS Action 13: TP Documentation; Master File, Local File and Country by Country Reporting

- Transfer pricing and customs valuations

- Transfer pricing aspects of intangibles

- Transfer pricing of financial transactions

- Transfer pricing and business restructuring

- Attribution of profit to permanent establishment

- Impact of digitalisation on related person and profit allocation rules

- Transfer pricing of services

- Worldwide transfer pricing cases and court rules

Our TP feasibility study on transfer pricing covers;

  • Assessment and planning of national and/or international transfer pricing risks,
  • Functional analysis for organisations, operations, related persons, functions, facts, risk and asset profile settings,
  • Economic analysis or benchmarking to identify the arm’s length range,
  • Reviewing, designing and implementation of all intra-group service charges, whether cost based or value based, “incremental cost/tax” on the transactions, cost sharing arrangements for research and developments, management fees, intangible assets, licensing of patents, know-how, trademarks, trade names and other intangibles,
  • Reviewing and designing of all intra-group charges for manufacturing, sourcing, distribution and other operations,
  • Reviewing of bilateral treaties for prevention of double taxation, customs valuation and tax valuation,
  • Calculation and creating optimal transfer prices and tax structures, assessment of the best transfer pricing method proven,
  • Transfer pricing documentation, certification and disclosure to support national and/or global compliance requirements of the authorised administrators,
  • Transfer pricing report vs advance pricing agreements with single or multiple tax authorities,
  • Dealing with scrutiny and audit, avoiding tax penalties, cross-border disputes prevention, solution and reconciliation,
  • Designing of an optimal national and/or global transfer pricing systems based on assessment and planning of national and/or international transfer pricing risks,

Our comprehensive TP Planning service is based on the assessment, planning and management of fiscal risks of multinationals and group companies of all sizes. GRANIT assists its clients in documenting transfer pricing policy in accordance with the standards contained in not only the Turkish Transfer Pricing Rules but also OECD Transfer Pricing Guideline and local country transfer pricing regimes.

Our transfer pricing services are structured on the overall value chain as

1)Company and Industry Analysis

2)Functional Analysis

  • Functions performed, risks assumed and asset employed,
  • Analysis of responsibility centers, expense centers, cost centers, revenue centers, profit centers and investment centers,
  • Analysis of business processes; procurement, intake and trading, processing, marketing and sales, logistics,
  • Tangible Assets and Intangible Assets (IP)
  • Risks of product liability, operating, warranty, market, currency, inventory, credit, capacity, liquidity, logistics and environmental

3) Transfer Pricing Policy

  • Price settings, price and/or profit checking,
  • Transfer price calculation
  • Selection of the most appropriate TP method
4) Economic Analysis
  • Comparables search,
  • Selection of comparables and database,
  • Financial analysis, inter-quartile range and other statistical methods
  • Analysis of comparable company results for an arm’s lenghts compensation

The outcome is a detailed transfer planning feasibility/planning report designed specifically for meeting the needs of the international business and requirements set by the transfer pricing rules.

More information please contact with one of our partners.