Going global from the Gold Coast? Why transfer pricing should be considered early

The Gold Coast is increasingly recognised as a globally connected business hub. With approximately $19 billion in annual exports and a strong manufacturing sector, more local businesses are expanding beyond Australia and establishing operations in overseas markets.

International expansion creates opportunities for growth, access to new customers and greater scale. It also introduces additional tax, governance and commercial considerations that many businesses have not previously encountered. One area that is often overlooked during this growth phase is transfer pricing.

Transfer pricing as a strategic growth consideration

Transfer pricing refers to the pricing of transactions between related entities within the same corporate group. While it is commonly viewed as a tax compliance requirement, the decisions that shape a transfer pricing position are often made well before tax returns are prepared. These decisions can influence where profits and losses are recognised, how overseas operations are funded, how intellectual property is owned and commercialised, and whether arrangements can withstand scrutiny from regulators, investors and prospective acquirers.

For businesses expanding internationally, transfer pricing is therefore not simply a tax issue. It is a strategic business consideration that can influence the success and sustainability of future growth.

Why transfer pricing matters during growth

The Gold Coast's next phase of economic growth is expected to be driven by businesses that can scale beyond local markets, including exporters, innovative manufacturers, technology companies and businesses commercialising intellectual property. As organisations expand internationally, transfer pricing considerations often emerge alongside broader decisions about operating models, funding structures and market entry strategies.

Common scenarios include Australian businesses funding offshore subsidiaries, technology companies developing intellectual property across multiple jurisdictions, family-owned groups establishing overseas operations and private businesses preparing for investment or sale.

In many of these situations, commercial decisions are made for sound operational reasons. However, where transfer pricing considerations are not addressed early, businesses may later find that key arrangements are difficult to support, document or explain.

Questions commonly arise around:

• Which entity should bear business risks and losses
• How related-party funding arrangements should be structured
• Where intellectual property ownership should sit
• How management services should be charged across the group
• Whether profits are aligned with the activities, assets and decision-making taking place in each jurisdiction.

Addressing these issues early can help businesses establish a framework that supports future growth while reducing the need for costly remediation as operations become more complex.

Increasing focus from tax authorities

Transfer pricing remains an area of ongoing attention for tax authorities globally, including the Australian Taxation Office (ATO). Businesses with cross-border related-party transactions are expected to demonstrate that their arrangements reflect commercial outcomes that would be expected between independent parties and are supported by appropriate evidence and documentation.

For many growing businesses, the challenge is not identifying whether a transfer pricing issue exists, but ensuring the commercial reality of the business aligns with the tax outcomes being reported. This can be particularly important where organisations have grown rapidly, expanded into multiple countries or evolved their operating model over time without revisiting historical intercompany arrangements.

As international operations mature, transfer pricing becomes increasingly connected to broader governance, risk management and commercial decision-making rather than being viewed solely as a year-end compliance exercise.

Transfer pricing and investor readiness

Transfer pricing is also becoming an important consideration in transactions, capital raises and strategic investment processes. Investors and acquirers are increasingly focused on understanding whether international related-party arrangements are commercially supportable, consistently applied and aligned with financial reporting and tax disclosures. Due diligence reviews commonly examine:

• Related-party transactions and supporting documentation
• Management fees, royalties and service arrangements
• Intercompany funding arrangements
• Consistency between transfer pricing outcomes, financial statements and tax disclosures
• Potential exposure to tax reviews, adjustments or penalties.

Where arrangements have developed informally over time, transfer pricing can become more than a compliance issue. It can lead to due diligence findings, increased transaction costs or remediation requirements before an investment or sale can proceed.

Looking beyond compliance

Many businesses first encounter transfer pricing when preparing tax returns or responding to a documentation requirement. By that stage, however, many of the underlying commercial decisions have already been made.

A more effective approach is to consider transfer pricing alongside broader strategic decisions relating to international expansion, funding, intellectual property management and operating model design. Doing so enables businesses to better understand the implications of those decisions before arrangements become embedded.

Ultimately, transfer pricing is about more than satisfying regulatory requirements. When considered proactively, it can support stronger governance, improve transparency across international operations and provide greater confidence as businesses enter new markets.

What this means for Gold Coast businesses

As more Gold Coast businesses pursue international growth, transfer pricing is likely to become increasingly relevant across a broad range of industries.

Whether a business is establishing overseas operations, funding offshore expansion, commercialising intellectual property internationally or preparing for external investment, transfer pricing should form part of the broader conversation around growth strategy and governance.

Businesses that consider these issues early are generally better positioned to align commercial objectives with tax outcomes, respond to stakeholder scrutiny and adapt as international operations become more complex.

In an increasingly interconnected business environment, transfer pricing is not simply about compliance. It is an important element of sustainable international growth.

How BDO can help

At BDO, we work with privately owned businesses, family groups, scale-ups and multinational organisations as they navigate international expansion and evolving regulatory requirements. Our transfer pricing specialists help businesses understand the implications of cross-border arrangements and support informed decision-making throughout the growth journey.