Transfer pricing services in Singapore and other financially competitive countries are quite in demand and highly valuable. One of the most common services that many businesses seek is transfer pricing consultancy. A transfer pricing consultant is an expert who accurately and comprehensively analyses information and applies financial knowledge to client situations in assisting them with preparing effective approaches to economic circumstances and developing practical planning solutions.
Although transfer pricing consultants play a significant role in the success of transfer pricing transactions, many businesses are still uncertain as to what a consultant can deliver for their organisations. Will a consultant make the process of transfer pricing easier to handle? Will they protect your business from sustaining costly penalties? Will they help you save tax dollars?
In this article, we share some of the critical benefits a transfer pricing consultant can bring to your company and the most effective ways to find the right consultant for your business needs.
What does a business consultant do?
1. Guarantee compliance with TP Guidelines
Companies, both big and small, usually face a huge compliance burden when it comes to satisfying the tax authorities. Producing transfer pricing documentation that is not just contemporaneous but also compliant with filing regulations can be quite challenging. If your transfer pricing documentation does not comply with the OECD guidelines and local tax regulations, you are likely to incur costly penalties.
As a taxpayer, you need to decide whether you have to take any reserves for unsure tax positions on your financial statements, which can be tough to determine in the absence of knowledge and experience in transfer pricing. This is where the value of a transfer pricing consultant comes in. Transfer pricing consultants commonly understand transfer pricing risks like no one else, so hiring one can protect your company from penalties and minimise its risk of being subject to dispute or audit by tax authorities.
2. Guide business in planning and optimising TP policies
Many companies usually hire transfer pricing consultants when there are significant changes in their businesses, such as when they develop a new product, create or acquire new intellectual property, alter their supply chain, or restructure their organisation. Amidst these critical changes, a transfer pricing consultant can help ensure that you make wise decisions regarding transfer pricing to guarantee positive results.
Essentially, careful and comprehensive transfer pricing planning in these situations of changes can lead to excellent financial performance. On the contrary, a lack of planning can result in poor business outcomes. Because transfer pricing consultants have substantial experience with various transactions and industries, they can bring a broad range of skills and knowledge to the table and help you find innovative ways to achieve ideal business results.
3. Assist with dispute resolution
Tax authorities are usually strict when it comes to companies’ transfer pricing documentation and tax policies. Just a single non-adherence to prescribed guidelines and regulations can already make your company subject to an audit or a dispute by tax authorities. In situations where your company’s transfer pricing documentation and tax policies are being audited or evaluated by the authorities, the assistance of a transfer pricing consultant can be very valuable.
From a strategic point of view, it is quite beneficial to hire a consultant from the outset because this type of professional knows the best way to present your business for achieving ideal outcomes and how to respond to requests for information. Comparatively, you have reduced chances of receiving a favourable resolution if your position has not been accepted by the tax authorities early on in the process. Basically, engaging experts from the start is crucial to establishing confidence and trust on the part of the authorities.
How to select a good transfer pricing consultant?
1. Consider their experience
Background and credentials are great indicators of a consultant’s competence and capability. Ideally, you want a transfer pricing consultant who has a broad range of experience, especially in your particular industry. On top of that, you should also choose someone who has an extensive experience in different transfer pricing scenarios and whose approach matches your objectives for your company’s transfer pricing strategy.
2. Ask about rate structure
Different consultants have different rates. Therefore, before hiring any transfer pricing services in Singapore, make sure to ask questions about the firm or consultant’s rate structure first in order for you to determine whether or not it fits within your budget. It is important to consider that even the most experienced and skilled transfer pricing consultant will not be able to help you if you simply cannot afford their services.
3. Determine if they have a pragmatic attitude
Pragmatism is important for any transaction or relationship to succeed. Before engaging the services of a transfer pricing consultant, it is important to determine beforehand whether they have a pragmatic attitude and if they can come up with a plan that is specifically tailored to your unique circumstances. This includes finding out if they will be designing a plan that fits your situation or merely giving you advice that you cannot realistically put into practice.
4. Pay attention to their previous success rate
Experience is one thing, success in managing situations similar to yours is another. Indeed, a consultant should not only have relevant experience in your particular industry, but also success in handling similar situations in the past. When interviewing a transfer pricing consultant to hire, remember to ask them about their experience and success rate in dealing with audits and defending companies from issues raised by tax authorities.
Transfer pricing consultants are without a doubt valuable for businesses. However, in order to get the best value out of your money, you need to carefully select the consultant you will be hiring. Choosing a consultant who has a broad range of experience, high success rate, practical attitude, and affordable services makes the difference between merely handling transfer pricing compliance and having a sustainable transfer pricing strategy intended to maximise profits.
At Max Lewis, we offer reliable transfer pricing services and a wide array of other beneficial services, ranging from business valuation and GST Assisted Self Help Kit (ASK) to corporate secretarial and employee shares option services in Singapore. For more information about our highly trusted services, do not hesitate to contact us today.