Transfer pricing

English /  日本語 

Deloitte’s transfer pricing practice has, once again, been voted the number one team in the Euromoney’s most recent survey into the 'World’s Leading Transfer Pricing Advisors'.

Japanese multinationals are operating in an environment of unprecedented complexity. With the rising volume and variety of both intercompany transactions and transfer pricing regimes, it comes as no surprise that transfer pricing is now perceived as one of the leading issues facing global businesses today. Many Japanese multinational companies are now appreciating that transfer pricing needs to be addressed as a fundamental part of their global tax profile, as well as to satisfy local country obligations.  In Europe, there is an ongoing trend for jurisdictions to introduce new/update existing national transfer pricing legislation. There is also an increased requirement to prepare transfer pricing documentation and increased tax authority scrutiny of taxpayers’ transfer pricing arrangements.

Our services

The Japanese Services team of the Deloitte UK transfer pricing practice deals with the entire transfer pricing spectrum, providing services to Japanese multinationals in relation to:

• Tax planning - By integrating the right transfer pricing strategy with your business objectives, we can generate tax savings to reduce your global effective tax rate.
• Economic consulting - We apply practical knowledge and advanced analytical techniques in applying the arm’s length standard.
• Thin capitalisation - We can advise on loan pricing and defend queries raised by tax authorities about levels of debt, intra-group interest payments and parental guarantees/letters of awareness.
• Global Earnings Management Strategies - We can help you review your supply chains and reorganise the economically relevant functions in your business to legitimately make the best use of jurisdictions with optimum tax rates and/or ensure that the global operations are structured efficiently.
• Documentation - We can prepare transfer pricing documentation as required in the UK to demonstrate that group policies are in line with the arm’s length standard. We can also prepare core OECD compliant European documentation.
• Transfer pricing audit defence - We have many years of experience in defending clients facing transfer pricing tax audits.
• Competent Authority - Deloitte has the world’s pre-eminent Competent Authority Team to resolve cases of double taxation.
• Advance Pricing Arrangements - We can negotiate with the UK and Japanese tax authorities to give you certainty about the tax treatment of important transactions.

Experience working with Japanese multinationals

The Japanese Services team of the Deloitte UK transfer pricing practice is part of the Japanese Business Taxation team and contains tax specialists, economists and accountants delivering value-added, innovative solutions to our clients.  We have experience in providing specialist services to a wide range of Japanese multinationals in a variety of industries.

Audit defence experience

We have assisted numerous UK based Japanese subsidiaries with respect to their transactions with either the Japanese parent or other group companies. In successfully defending one combined investigation into four Japanese multinationals, we adopted an approach that benefited from our global experience in defending similar challenges in other jurisdictions.

European Transfer Pricing Documentation

Transfer pricing documentation must demonstrate that the taxpayer’s policies are in line with regulatory requirements for appropriate methodologies and with the arm’s length standard.

As well as producing UK specific documentation for UK based subsidiaries, we are increasingly assisting Japanese multinationals with the preparation of their European Documentation Masterfile. The Masterfile represents new standardised and centralised 'EU Transfer Pricing Documentation' which has been agreed by the EU member states as part of a Code of Conduct. The core documentation is intended to enable greater certainty and reduced compliance costs and risks of documentation related penalties for multinationals.

Transfer Pricing Assurance

Today, transfer pricing decisions are subject to more scrutiny than ever by tax authorities worldwide. The complexity of these dealings and the uncertainty associated with their tax treatment make the option of an Advance Pricing Arrangement (APA) very attractive. An APA is an agreement formed between the two relevant taxation authorities, though consultation with the multinational in question whereby the terms of transactions are agreed in advance of their occurrence. We were engaged by a major Japanese consumer electronics group to draft and submit a bilateral APA application. The project involved the design and implementation of a complex profit split pricing model to appropriately reward the key value-creating functions undertaken in Japan and the UK, consistent with the group’s new global business model and product development platform.

The group required certainty over the location and treatment of the taxable income arising from its high-technology products, and therefore decided to seek approval for its pricing policies from both the Japanese and UK tax authorities, rather than wait to define its intra-group pricing under audit.

European Headquarters functions

We have extensive experience in implementing Cost Allocation Arrangements (CAA) for the European Headquarter operations of our Japanese clients. We have developed a successful framework for applying an OECD compliant methodology to implement CAAs and the required supporting transfer pricing documentation. This approach ensures that our clients adopt the appropriate tax treatment for the costs of performing intra-group services.

Competent Authority

The Competent Authority process allows multinationals access to a valuable dispute resolution mechanism. Our Competent Authority experts have unrivalled expertise of using the Competent Authority process to minimise the impact of transfer pricing audit settlements by ensuring that corresponding adjustments eliminate any double taxation arising. Our team has extensive experience in dealing with UK/Japanese claims involving both corporate and personal tax issues.

Supply chain

There is increasing interest from Japanese owned companies for a review of their supply chain given competitor pricing pressures. In order to assess efficiency and to priorities and initiatives many companies are benchmarking their supply chain and including the cost of tax as part of this assessment.  
A tax efficient supply chain can help to deliver competitor advantage and shareholder value in this age of globalisation, by ensure the tax efficient allocation of earnings within the multinational group.

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