Transfer Pricing

Transfer Pricing

International trade, investments, information technology and outsourced manufacturing have weaved the economies of diverse countries together. Essentially, we are increasingly experiencing the economic integration of global markets.

Globalization has been credited with helping shift wealth to less-developed countries. However, globalization is also often blamed for the loss of wealth from developed countries through inflated transfer pricing. Most multinationals entities have been on the receiving on this regard and most revenue authorities from developing nations have argued that the traditional transfer pricing documentation is not sufficient to assess whether cross-border transactions are in conformity with the arm’s length principle.

In response to this gap, the Organisation for Economic Cooperation Development developed Base Erosion and Profit Shifting (BEPS) action plans. This action plans have increased the disclosure and the reporting requirements for multinational entities.

Multinationals are therefore required to have a transfer pricing documentation and an up to date contemporaneous transfer pricing policy to support all their cross-border transactions.

Further, multinational are required under the BEPS action plans to comply with country by country reporting, maintain a local file and a master file and update their Transfer pricing policies every time there is a material change in the operating model or after every three years.

At SKM we help clients to develop contemporaneous defensible transfer pricing policies, document the policies and outcomes and assist clients to implement the transfer pricing. We also assist the client in depositing the transfer pricing policy with the Kenya revenue authority and responding to any questions raised therefrom.