Many transfer pricing strategies are available. Before you dwell on the morass of new transfer pricing tax rules in depth, it might be advantageous for you to assess where your company fits, or should fit, in the spectrum of strategies.

Head in the Sand Approach
One approach to transfer pricing is to do nothing, stand pat. As one taxpayer stated,“We have some sand, and we’re looking for an ostrich. We don’t understand the tax rules, and neither does the IRS. We don’t want to rock the boat, or provide the IRS with a roadmap to our company with the documentation we prepare. The preamble to the new transfer pricing regulations says that the ‘estimated average annual burden per recordkeeper is 0.8 hours,’ and we will be devoting just that amount, 48 minutes per year, to transfer pricing.”

Comprehensive Analysis Approach
Some companies are implementing a full-blown comprehensive approach to transfer
pricing, creating and developing a team of decision makers and other resource
people, both within and without the company itself. More than 30 categories of professionals
could be included in the transfer pricing team, including the following:
Accounts payable accountants. To review credit and collection strategies, a process needed to compare transactions
Controllers. Operations executives providing the database to develop and defend transfer pricing
Cost accountants. To develop the bulwark of the database needed to apply theresale price method or the cost plus method
Financial accountants. Using FAS and SEC accounting rules to prepare a database needed for comparative purposes
Tax accountants. To prepare the documentation for the tax return
Contract attorneys. An analysis of contracts and terms is mandatory for transfer pricing purposes.
Customs attorneys. The cost of tariffs and tax costs should be considered together for transfer pricing purposes.
Intellectual property attorneys. Ascertaining the scope of intangible property may be significant; licensing is an important facet of transfer pricing.
Litigation attorneys. Discovery procedures and confidentiality are needed long before litigation is contemplated.
Tax attorneys. Interface between the other attorneys and the accountants
Trade attorneys. Countervailing duties and dumping should be considered together with taxation.
Computer programmers. To implement record retention and prepare analytical reports
Customs specialists. Customs documentation is important evidence for tax purposes.
Economic geographers. To prepare analysis between countries, sometimes needed for comparative purposes
Microeconomists. Difference analysis is at the heart of transfer pricing analysis, preparing the viability of comparable transactions.
Macroeconomists. To select the database; to cope with business cycles as they affect transfer pricing
Employee benefits specialists. Fringe benefits might affect costing to determine the gross profit markup or gross profit.
Engineering economists. To interface between production engineers and process engineers and economists
Production engineers. To determine functions of the company
Process engineers. To determine functional analysis
Financial analysts. To review financial reporting prepared by the company’s competitors, to determine comparable ratios
Industry specialists. Persons who know what is going on in the industry, developing market share analysis
Marketing specialists. To assess the advertising, marketing, and sales functions of the company
Mathematical statisticians. To determine the relevant range of transactions for comparability analysis
Personnel. To obtain job descriptions needed to determine functions performed
Operational analysts. Developing procedures that explain how the company works
Risk analysts. To prepare the mandatory analysis of risk and exposure
Tax specialists


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