'What you learn on...Transfer Pricing courses'

Martin Zetter, ACMA, has worked in the transfer pricing group of Ernst & Young. Before that, he was the global head of transfer pricing for one of the world’s largest international groups, where he set up and managed the function. He has led the transfer pricing response on major tax audits in developed and emerging economies

Transfer pricing relates to the cross-border flow of goods and services within a group of companies. These courses cover transfer pricing for tax purposes.

They are ideal for companies that wish to minimise compliance costs by empowering in-house staff to undertake the basic tasks. In almost all countries where a group does business internationally, there is a requirement to report the correct amount of taxable profit according to transfer pricing rules.

Documentation needs to be prepared for local purposes in each country, and be consistent across the group. These courses teach the guidance set out by the Organisation for Economic Co-operation and Development, under which most countries develop their transfer pricing rules.

The focus is on a practical approach to meeting the requirements under UK and overseas rules. They examine how to apply the “arm’s-length principle”, whereby the amounts charged between related parties should equate to the position as if the parties were not related.

Depending on where profit is generated geographically, groups are subject to different rates of tax. Most likely, a better result can be achieved if personnel are suitably aware in financial and strategic planning.

The finance professional needs to comply with the regulations, while at the same time selecting the best available fit for the group.

Typically, in many companies the finance director or financial controller will task someone in the accounts or tax department to manage the challenge. So our courses are designed to help the lucky recipient, both to understand the concepts and to tackle the tasks.

The courses cover accepted norms in areas where the available guidance is quite general, or even vague. Both courses are also relevant to finance directors and financial controllers who assess work from other team members. Equally important for them is the need to understand transfer pricing from a business planning perspective. It also helps to ensure the company gets value for money from its tax advisers.

Course 1 – Fundamentals of Transfer Pricing
A likely requirement is for finance staff to be asked to prepare a study of the business for transfer pricing purposes. This will be used to evaluate which transfer pricing methods may be applicable, and form the basis of transfer pricing documentation.

A report will be prepared showing how the business works, breaking down where value is added, showing the labour functions, the assets used and the risks faced.

From this the thinking moves to how the group complies with the arm’s length principle. The achievement from the course will be the ability to produce a straightforward report. The course is aimed at medium-sized, as well as larger groups, that have significant international businesses, but do not wish to outsource much of the work.

Generally, it will complement rather than supplant specialist advice. This course is of particular interest to members of the finance team who prepare figures for their colleagues in the tax department or internal transfer pricing team.

Course 2 – Effective Transfer Pricing
This course is geared for finance directors and financial controllers to understand how a team member produces a report. It’s also a natural progression for those who have attended the “Fundamentals” course and want to take things to a deeper level. It starts with a refresher, though this is not in any way a substitute for attending the first course.

Delegates are encouraged to consider very carefully if their knowledge of transfer pricing is sufficient before attending. This course features more complex issues, such as intangible assets, what to do when things go wrong, how to manage your way out of difficulties, and the potential roadblocks.

There’s plenty of practical guidance on how to develop a corporate governance framework covering transfer pricing risks. This includes practical suggestions for developing systems for tracking transfer pricing risk, as well as reporting to governance and risk committees.

A third course, if it gets running, will look at more complex economic issues. That’s the more contentious stuff, applying micro-economics and various theories of finance and valuation – areas of detail encountered in negotiations with tax authorities or litigation.

Visit www.cimamaster courses.com for more details about this and all CIMA Mastercourses.