International Tax Strategies – Transfer Pricing & Compliance
At the “Transfer Pricing & U.S. International Tax Compliance Seminar,” Ellen Juram and Alex Martin discussed tax strategies for conducting international business, including the intricacies of transfer pricing as it pertains to international tax compliance, cashflow improvement strategy, base erosion and profit shifting.
Many of our growth-driven clients face the realities of a global economy on a daily basis, and must confront the pressures of global competition by sourcing products or services throughout the world, licensing their products in foreign markets or opening subsidiaries in a new land. You can learn more about how your business could be impacted by your international footprint by visiting our website here
Ellen Juram, a principal with Barnes Dennig, discussed what tax effects to consider when operating in a foreign country. Juram illustrated how different operational decisions such as jurisdiction, pricing, and entity structuring have an effect on the amount of taxes paid in the United States. She also detailed out how the Foreign Account Tax Compliance Act, or FATCA, is changing what informational returns must be filed in the United States when a company has international operations and what kinds of information is disclosed.
Alex Martin, who specializes in transfer pricing practices with Clayton & McKervey, explained what tax issues arise from transfer pricing and provided some procedures to follow when enacting transfer pricing. Martin explained that the IRS and other foreign taxing agencies will soon be able to determine through informational returns how much income is reported in the United States versus in foreign countries and will begin to audit companies to determine if they are paying the right amount of taxes. “One way to mitigate audit risk, is to prepare transfer pricing documentation annually that justifies transfer pricing using functional, industry, and economic analysis,” noted Martin.