Managing TP in the Short & Long Term: Five key takeaways

17 June 2020

Did you miss our webinar? Here are the five takeaways from the second webinar in our TP Minds Digital series: Managing TP in the Short & Long Term.

Takeaway 1: Cash is still king

  • Linda Besenyei - “To meet urgent funding requirements across the group, we turned to flexible funding options such as short term funding, floating interest rates, and making the financial instrument as flexible as possible.”

Takeaway 2: Low risk is not no-risk

  • Joel Phillips - “Low-risk entities should bear an element of the economic impacts of COVID-19. It is important to assess your current TP policies to see if their financial results are appropriate. This is particularly important when determining who should bear COVID-19 related extraordinary items.”
  • Zara Ritchie - “It’s important to raise question marks on how much risk is in your control.”

Takeaway 3: Commercial arrangements will change due to COVID-19

  • Joel Phillips - “The entity needs to be fully aware of their commercial arrangements and structures that may or may not have been impacted by COVID-19. Understanding commercial relationships and how they affect the substance of the relationship is paramount.”

Takeaway 4: Transfer pricing adjustments and regular documentation is key in the race to adapt to a post-COVID economy

  • Joel Phillips - “There are benefits to developing strong governance in your Transfer Pricing documentation support. If you do not do it during the year critical evidence can be lost. It’s also a great conduit to start discussions on exceptional items that might occur throughout the year.”

Takeaway 5: Judgement will be needed where a company is a stand-out success as well as where losses are made

  • Linda Besenyei - “Tax authorities will expect reasonable judgment on where profits should sit in the current year. If you’re realising super profits or extraordinary losses, you will need to adjust your pricing points as best you can based on the market data available to you. The financial results to update your comparables will only become visible in the next year.”

TP Minds Digital Series

A global series of webcasts, interviews, and virtual roundtables addressing the current transfer pricing developments due to COVID-19, includes four free-to-attend webinars covering practical advice and guidance on the latest transfer pricing challenges affecting the international tax community.