Transfer Pricing Agreements
Transfer pricing agreements (TPAs) work in conjunction with DTAs. The signatories of the TPA agree the costs attributable in each country to particular services or manufactured goods. The aim of such agreements is to avoid profits in one country (which may have high tax rates) being fully transferred to the second country in which the tax rates may be lower. Given that market forces affect the price of goods and services it is not possible for governments to agree fixed amounts, instead they normally agree a range of percentages. Given the diversity of goods and services on offer it is relatively rare that an existing TPA applies to a specific good or service. It can, however, be extremely useful to companies to get advance rulings on how a particular good or service will be taxed in each country to assist corporate planning.
Tax Associates International has particular expertise both in existing arrangements and in negotiating specific judgements and would be pleased to work with you to provide the most effective arrangements. Please contact us for a personal discussion.
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