Jones Day - Services - Transfer Pricing

"Transfer pricing" is an increasingly important and contentious area of the tax law in the U.S. and around the world. It deals with the pricing for "intercompany" transactions, that is, transactions between commonly controlled parties such as a parent corporation and its subsidiaries, or "brother-sister" corporations. The U.S. and all its major trading partners have tax laws designed to prevent multinational groups from reducing taxes inappropriately by entering into transactions among related parties on terms that would not occur in a comparable "arm's length" situation.

Transfer pricing typically involves international transactional flows among the members of a multinational corporate group, such as licensing of intellectual property, sales of components for use in manufacturing products, and intercompany financings and loans. Non-U.S. tax administrators have followed the lead of the U.S. Internal Revenue Service in requiring extensive contemporaneous documentation of the tax justification for such related party transactions and aggressively auditing those transactions to ensure arm's length pricing. Multinational taxpayers are often caught between jurisdictions making inconsistent tax claims as to the same cross-border transactions, which can result in "international double taxation." As tax administrators become more aggressive in seeking revenues, transfer pricing examinations and litigation have increased in number and scope, and taxpayers have become increasingly vulnerable to double (or even triple) taxation.

Due to our global reach and integrated international tax practice, Jones Day is well positioned to represent taxpayers engaged in multinational operations. Jones Day can assist taxpayers in structuring cross-border transactions to minimize the risk of transfer pricing audit issues. We can also assist taxpayers in preparing and presenting their transfer pricing documentation, often in cooperation with economists and accountants, to ensure compliance with documentation requirements and thereby reduce challenges by tax administrators around the globe. We have advised clients on strategies that will enable them to comply with the tax law in all major jurisdictions and still reduce their global effective tax rate. We can also assist taxpayers in alternative processes, such as obtaining an advance pricing agreement (APA), under which a taxing authority reaches agreement with the taxpayer concerning its transfer pricing practices for current and several future years.

In the event a taxpayer's transfer pricing practices are challenged at home or abroad, Jones Day combines substantive knowledge with our extensive experience in tax controversy matters. We effectively represent taxpayers at all stages of a transfer pricing controversy—from audit, through administrative proceedings, to litigation if necessary. We also have extensive experience with the "competent authority" process, which allows taxpayers to request assistance under relevant tax treaties in order to avoid double taxation.

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Lawyers Staff Overview Professionals Publications Main Practice Tax	"Transfer pricing" is an increasingly important and contentious area of the tax law in the U.S. and around the world. It deals with the pricing for "intercompany" transactions, that is, transactions between commonly controlled parties such as a parent corporation and its subsidiaries, or "brother-sister" corporations. The U.S. and all its major trading partners have tax laws designed to prevent multinational groups from reducing taxes inappropriately by entering into transactions among related parties on terms that would not occur in a comparable "arm's length" situation. Transfer pricing typically involves international transactional flows among the members of a multinational corporate group, such as licensing of intellectual property, sales of components for use in manufacturing products, and intercompany financings and loans. Non-U.S. tax administrators have followed the lead of the U.S. Internal Revenue Service in requiring extensive contemporaneous documentation of the tax justification for such related party transactions and aggressively auditing those transactions to ensure arm's length pricing. Multinational taxpayers are often caught between jurisdictions making inconsistent tax claims as to the same cross-border transactions, which can result in "international double taxation." As tax administrators become more aggressive in seeking revenues, transfer pricing examinations and litigation have increased in number and scope, and taxpayers have become increasingly vulnerable to double (or even triple) taxation. Due to our global reach and integrated international tax practice, Jones Day is well positioned to represent taxpayers engaged in multinational operations. Jones Day can assist taxpayers in structuring cross-border transactions to minimize the risk of transfer pricing audit issues. We can also assist taxpayers in preparing and presenting their transfer pricing documentation, often in cooperation with economists and accountants, to ensure compliance with documentation requirements and thereby reduce challenges by tax administrators around the globe. We have advised clients on strategies that will enable them to comply with the tax law in all major jurisdictions and still reduce their global effective tax rate. We can also assist taxpayers in alternative processes, such as obtaining an advance pricing agreement (APA), under which a taxing authority reaches agreement with the taxpayer concerning its transfer pricing practices for current and several future years. In the event a taxpayer's transfer pricing practices are challenged at home or abroad, Jones Day combines substantive knowledge with our extensive experience in tax controversy matters. We effectively represent taxpayers at all stages of a transfer pricing controversy—from audit, through administrative proceedings, to litigation if necessary. We also have extensive experience with the "competent authority" process, which allows taxpayers to request assistance under relevant tax treaties in order to avoid double taxation.