Transfer pricing continues to be a critical issue for both tax
authorities and taxpayers alike and 2015 is likely to see a
continuation of the key trends that started to emerge in 2013 and
2014.
Transfer pricing rules serve to allocate income earned by a
Group among those countries in which the Group does business. Under
the principles of transfer pricing, taxpayers are expected to
evaluate the allocation of functions, risks and assets between the
various Group companies in determining the arm's length price
that should be applied to related party transactions.
Increasingly, due to tax planning that is primarily focused on
minimising effective tax rates, multinationals are being accused of
being able to use and/or misapply these transfer pricing rules and
principles to essentially separate income from the economic
activities that produce that income and to shift it into low-tax
environments.
