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Transfer pricing rises up the scale for BRIC

UK

Increased foreign investment and regulation are just two of the reasons why the BRIC countries have become significant locations for transfer pricing. Taxand UK investigate this shift and give their point of view along with Taxand Brazil, Taxand Russia, Taxand India and Taxand China for the International Tax Review.

Fortune magazine's 2009 survey of the 500 largest corporations reported almost 10% parented in Brazil, Russia, India and China (BRIC) (compared with 14% in Japan and 28% in the US). The percentage shift has changed dramatically over the past 10 years. It is no secret that almost every global client planning to invest in these countries needs assistance with the navigation of transfer pricing requirements in these countries.Transfer pricing is a particular business concern in these locations due to:

  • An increase in the size and scale of operations attracting the interest of the relevant tax jurisdictions.
  • Recent case law and extended legislative provisions rendering the environments complex.
  • An increase in offshoring to these jurisdictions to achieve cost optimisation.
  • Intellectual property development attributed to these jurisdictions due to an expansion of economic substance.

Experience from long established transfer pricing regimes (such as the US and the UK) demonstrates that the release of comprehensive legislation and/or extensions to the legislation is often associated with a step-up in audit activity. In the past three years, there has been an increase in transfer pricing audit activity in the BRIC countries and this has contributed to an increased burden of compliance levied upon multinational groups. Even though the BRIC countries are not members of the OECD, the work of that body has been successful in contributing to a uniform global standard. However, there are a number of domestic considerations and peculiarities to be aware of.

Taxand UK collaborates with Taxand Brazil, Taxand Russia, Taxand India and Taxand China to identify the transfer pricing legislation in their jurisdction and how multinationals can take advantage.

Your Taxand contact for further queries is:
Shiv Mahalingham
T. +44 207 715 5234
E. smahalingham@alvarezandmarsal.com

 

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