ARTICLE · 14 FEBRUARY 2025

Intergroup Financial Transactions: Loans And PoB

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In multinational enterprises (MNEs), intergroup financial transactions play a crucial role in optimizing capital allocation, liquidity management, and tax efficiency.

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Andersen – Maher Milad Iskander & Co.

In multinational enterprises (MNEs), intergroup financial transactions play a crucial role in optimizing capital allocation, liquidity management, and tax efficiency. Two common methods used for intra-group financial support are loan agreements and payment on behalf (PoB) structures. Each has distinct transfer pricing (TP) implications, financial costs, and opportunity costs that MNEs must carefully evaluate to ensure compliance with OECD guidelines and local regulations.

Intergroup Financial Transactions Typically Include

Intercompany Loans – Lending arrangements between related parties, requiring appropriate interest rates based on credit risk and market conditions.
Cash Pooling – Centralized treasury management to optimize liquidity, which must fairly compensate cash contributors and borrowers.

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