Transfer Pricing
Intercompany fund flow mechanisms: costs and benefits.
A multinational corporation unbundles its total flow of funds between each pair of subsidiaries into separate components associated with resources transferred as:
i) products
ii) capital
iii) services
iv) technology
E.g. Dividends, interest and loan repayments capital invested as equity or debt
Fees loyalties or corporate overhead corporate services, trademarks or licences.
Different channels (for moving money and profits internationally).
i) transfer pricing
ii) fee and royalty adjustments
iii) leading and lagging
iv) intercompany loans
v) Dividend-adjustment and investing in the form of debt vs equity.
Tax factors: total tax payments on intercompany fund transfers depend on the tax regulation of both the host and recipient nations.
Intercompany fund flow mechanisms: costs and benefits.
A multinational corporation unbundles its total flow of funds between each pair of subsidiaries into separate components associated with resources transferred as:
i) products
ii) capital
iii) services
iv) technology
E.g. Dividends, interest and loan repayments capital invested as equity or debt
Fees loyalties or corporate overhead corporate services, trademarks or licences.
Different channels (for moving money and profits internationally).
i) transfer pricing
ii) fee and royalty adjustments
iii) leading and lagging
iv) intercompany loans
v) Dividend-adjustment and investing in the form of debt vs equity.
Tax factors: total tax payments on intercompany fund transfers depend on the tax regulation of both the host and recipient nations.