WHAT IS TRANSFER PRICING? PARTNER EXPERIENCE

Bill JACAY

Transfer Pricing Supevisor - Peru

https://tgs-sarrio.pe/

A transfer pricing study is a tool used to determine if certain commercial transactions between related parties are being conducted at market value. These related parties can be sister companies, subsidiaries, and/or affiliates that either have some level of ownership in each other, sit on each other’s boards of directors, or share common partners.

This study demonstrates whether the transactions between these parties are being conducted under normal market conditions, as companies often seek to transfer certain benefits or shift profits to entities located in jurisdictions with more favorable tax conditions. For example, a company located in a country with a higher tax rate may attempt to transfer its profits to a company in a country with a lower one. This may be done by arranging a transaction between the two entities that does not reflect the market value that would normally be seen if the transaction was carried out with a third party. Typically, the types of transactions negotiated between related parties can include loans, royalties, technical assistance, leases, or any provision of services.

The consulting market has seen steady and continuous growth for the past 5 years, with the emergence of specialized agencies and consulting firms playing a significant role in this trend. A survey conducted last year among executives of medium and large companies in Latin America aimed to understand more about the consulting market.

There are several reasons why companies seek consulting services. The most requested services include training, digital and IT services, administrative and back-office support, strategy and innovation, and communications.

Below are the reasons:

A transfer pricing study is a tool used to determine if certain commercial transactions between related parties are being conducted at market value.

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