The beginning of 2021 is an ideal time for companies to consider their transfer pricing planning opportunities. In DHG’s most recent webinar, Steve Amigone, Samit Shah and StarTaxed’s Borys Ulanenko cover the variety of planning options around COVID-19, financial transactions and captive insurance. The following summarizes key takeaways from their discussion:
There are four main areas of guidance from the Organisation for Economic Co-operation and Development (OECD) around COVID-19:
- Comparability Analysis: With the comparability analysis there is greater flexibility around less relevant comparability search criteria.
- Losses and Allocation of COVID-19 Specific Costs: There are a multitude of risk allocation and profits/losses distribution options that your company can utilize.
- Government Assistance Programs: The variety of government assistant programs that have been enacted in response to the impact of COVID-19 can be a significant factor for transfer pricing considerations.
- Advance Pricing Arrangements (APAs): These arrangements can be beneficial to creating a collaborative and transparent approach to tax solutions.
Financial Transactions and Interest Push-Down
To utilize the tax and transfer pricing advantages of interest push-down is for parent/holding companies to have their operating subsidiaries listed as co-obligators. This can push down interest and state tax benefit for the company.
Captive insurance helps companies to have greater control over their risk factors and the financial capacity to assume risks.
The tax and transfer pricing implications that would follow include substance and control over risk demonstration; underwriting outsourcing; and insurance of risks that are traditionally difficult to insure.
To learn more about transfer pricing topics, you can join a course on www.startaxed.com using the following discount code for 20 percent off – DHGWEBINAR.
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