Case studies
Case Study: Multinational Compliance with Transfer Pricing Regulations
Client Profile:
- Industry: Technology (Software as a Service – SaaS)
- Company Size: Mid-sized multinational operating in 5 countries (HQ in the US, subsidiaries in Europe and Asia)
- Annual Revenue: $50M
- Challenge: Ensuring compliance with transfer pricing regulations across jurisdictions while optimizing tax efficiency.
Challenge:
The client faced several pain points:
- Complex Intercompany Transactions: The company had recurring intercompany transactions, including software licensing fees, R&D cost-sharing, and shared services agreements.
- Non-Compliant Documentation: Their previous transfer pricing documentation was incomplete, putting them at risk of non-compliance and penalties.
- Tax Audit Risk: The company was flagged for a tax audit in one of its European subsidiaries.
- Cost Concerns: Previous consultants provided high-cost, time-intensive solutions without clear outcomes.
AIAS Solution:
AIAS approached the challenge by implementing a streamlined and comprehensive transfer pricing strategy:
Detailed Analysis:
Conducted a functional and risk analysis to determine how value was created and distributed across the company’s global operations.
Identified high-risk intercompany transactions requiring immediate documentation.
Benchmarking Studies:
Performed robust benchmarking analysis to determine arm’s length pricing for software licensing fees, R&D cost-sharing, and shared services.
Used global and local databases to ensure accurate and defensible comparables.
Customized Transfer Pricing Policy:
Developed a tailored transfer pricing policy for the company, aligning with OECD guidelines and local laws.
Standardized processes for future intercompany transactions to reduce risk.
Audit Representation:
Represented the client during the European tax audit, addressing all inquiries with the newly created documentation and benchmarks.
Prevented penalties by proactively demonstrating compliance with arm’s length principles.
Fixed Pricing and Efficiency:
Delivered the project within 4 weeks for a flat fee of $5,000, significantly lower than the market average.
Provided clear, actionable advice without surprises or delays.
Outcome:
Compliance Achieved:
AIAS ensured full compliance with transfer pricing regulations in all 5 jurisdictions.
The client successfully passed the European tax audit without any adjustments or penalties.
Cost Savings:
The flat-fee model reduced consultancy expenses by 77% compared to their previous provider.
Optimized transfer pricing policies resulted in $200k annual tax savings through efficient cost allocations.
Operational Efficiency:
Standardized intercompany transaction processes reduced administrative burdens for the finance team.
Future audits became more manageable with structured, reusable documentation.
Client Feedback:
- “AIAS completely transformed the way we handle transfer pricing. The process was fast, transparent, and far more affordable than we imagined. Their expertise helped us save time, money, and a lot of stress!”
Key Takeaways:
- AIAS Advantage: Simplified processes, clear pricing, and unmatched expertise in transfer pricing.
- Impact: Immediate compliance, significant cost savings, and long-term operational improvements.
Case Study: Streamlining Transfer Pricing for a Growing E-Commerce Company
Client Profile:
- Industry: E-Commerce (Consumer Goods)
- Company Size: Mid-sized, operating in 8 countries (North America, Europe, and Asia)
- Annual Revenue: $80M
- Challenge: Managing intercompany transactions for rapid international expansion while ensuring compliance.
Challenge:
The e-commerce company faced several challenges as it scaled internationally:
- Complex Intercompany Transactions: The company had intercompany sales of products, centralized logistics operations, and marketing services spread across subsidiaries.
- High Compliance Risk: With operations in multiple jurisdictions, local tax authorities were requesting transfer pricing documentation.
- Lack of Standardized Policies: The company didn’t have a clear transfer pricing policy, leaving it vulnerable to adjustments and penalties.
- Cost Control: High fees from their previous transfer pricing advisor were unsustainable for a fast-growing company.
AIAS Solution:
AIAS developed a customized, cost-effective strategy to streamline the company’s transfer pricing compliance:
Functional Analysis
Conducted an in-depth review of the company’s operations, identifying key value-adding activities and risk-bearing entities.
Mapped out the roles of each subsidiary to establish clear profit allocation rules.
Benchmarking Study
Performed a benchmarking analysis to set arm’s length pricing for intercompany sales, logistics, and marketing services.
Used reliable regional databases to provide defensible comparables for each jurisdiction.
Transfer Pricing Documentation
Prepared comprehensive documentation for all jurisdictions where the company operated, ensuring full compliance with local regulations and OECD guidelines.
Policy Design and Standardization
Developed a centralized transfer pricing policy for the company to streamline future intercompany transactions.
Implemented standardized pricing methods for logistics services and marketing fees.
Audit Readiness
Ensured the company was fully prepared to address any inquiries from tax authorities with robust, audit-ready documentation.
Outcome:
Compliance Achieved Across 8 Jurisdictions
- The company met all transfer pricing requirements, avoiding penalties and adjustments.
Cost Savings of $150k Annually
- By implementing standardized pricing and reducing advisory fees, the company saved over $150k annually.
- The flat $5,000 fee from AIAS provided predictable, affordable compliance services.
Streamlined Operations
- Standardized policies reduced the administrative burden on the finance team.
- Intercompany transactions became simpler and more transparent.
Audit Preparedness
- The company successfully passed a transfer pricing audit in one European jurisdiction without adjustments.
Client Feedback:
"AIAS transformed our approach to transfer pricing. The process was quick, straightforward, and far more affordable than our previous advisors. Their expertise gave us confidence as we expanded internationally."
Key Takeaways:
- Predictable Pricing: AIAS’s flat $5,000 fee provided significant savings compared to traditional advisors.
- Scalable Solutions: Centralized policies enabled the company to scale operations without additional compliance risks.
- Expert Support: With AIAS, the company gained access to seasoned professionals who simplified the complexities of transfer pricing.
© Copyright. Tous droits réservés.
Nous avons besoin de votre consentement pour charger les traductions
Nous utilisons un service tiers pour traduire le contenu du site web qui peut collecter des données sur votre activité. Veuillez consulter les détails dans la politique de confidentialité et accepter le service pour voir les traductions.