登录查看更多内容

Last updated on 2024年8月1日

How can you use transfer pricing to manage currency and foreign exchange risks?

由人工智能和领英社区提供技术支持

If you are a multinational company that operates across different countries and currencies, you may face currency and foreign exchange risks that can affect your profitability and cash flow. One way to manage these risks is to use transfer pricing, which is the practice of setting the prices of goods and services exchanged between related entities within the same group. Transfer pricing can help you align your business model with your tax and financial objectives, as well as reduce your exposure to currency fluctuations. Here are some tips on how to use transfer pricing to manage currency and foreign exchange risks.

此文章中的业界达人

由社区从 4 条内容中精选。了解更多

1 Understand your value chain

The first step is to understand your value chain, which is the sequence of activities that create and deliver value to your customers. Your value chain includes the functions, assets, and risks of each entity within your group, as well as the intercompany transactions that link them. By analyzing your value chain, you can identify where you generate value, where you incur costs, and where you face currency and foreign exchange risks.

添加您的观点

Clint Engler

CEO/Principal: CERAC Inc. FL USA..... ?? ????????Consortium for Empowered Research, Analysis & Communication
举报内容
You can adjust prices between your international subsidiaries, making the gnome think your profits are stashed in a different vault (aka, a country with a friendlier exchange rate). Poof! Gnomes confused, profits protected. Need a shield against future gnome attacks? Use transfer pricing to shift profits to subsidiaries in stable currencies, building a currency moat around your bottom line. The gnomes gnash their teeth, but your treasure stays sparkling. Don't think you can fool the gnomes forever. Be transparent with tax authorities, document your transfer pricing magic with clear spells (aka, paperwork), and the gnomes might just grant you safe passage. Remember, transfer pricing is a powerful tool, but use it wisely.

已翻译

赞

2 Choose your transfer pricing method

The next step is to choose your transfer pricing method, which is the way you determine the arm's length price of your intercompany transactions. The arm's length price is the price that independent parties would agree on in a similar transaction under similar circumstances. There are different transfer pricing methods, such as the comparable uncontrolled price method, the resale price method, the cost plus method, the transactional net margin method, and the profit split method. Each method has its advantages and disadvantages, depending on the nature and complexity of your transactions, the availability and reliability of comparable data, and the consistency with your business model.

添加您的观点

Roberta Varella

Head of Finance | Board | Strategic and Financial Planning | Investor Relations | Portfolio Analysis, New Business Development
举报内容
Exactly. Choose your methodology and be consistent. There is no right or wrong. You need to know to explain your decision believing in the long term. Short term pumps will happen. If you work for a listed company, transparency is always the key.

已翻译

赞

3 Align your transfer pricing with your business model

The third step is to align your transfer pricing with your business model, which is the way you create and capture value in your market. Your business model includes your value proposition, your target customers, your revenue streams, your cost structure, and your competitive advantage. Your transfer pricing should reflect your business model, as well as your tax and financial objectives. For example, if your business model relies on innovation and intellectual property, you may want to allocate more profits to the entities that own and develop these intangible assets. If your business model depends on efficiency and scale, you may want to minimize the profits of the entities that perform routine and low-risk functions.

添加您的观点

4 Monitor and adjust your transfer pricing

The fourth step is to monitor and adjust your transfer pricing, as currency and foreign exchange rates may change over time. You should regularly review your transfer pricing policies and documentation, and update them if necessary. You should also check if your transfer pricing complies with the tax laws and regulations of the countries where you operate, and if you need to report or disclose any information to the tax authorities. You should also consider using hedging strategies, such as forward contracts, options, or swaps, to reduce your exposure to currency fluctuations.

添加您的观点

Crystal Stranger, JD, EA, NTPI Fellow

Angel Investor ? Board Member ? International Tax Specialist ? 20+ Year Real Estate Investor ? Speaker ? Writer ? Blockchain Technology ? EOS Master Integrator ? Multi-Industry Business Development
举报内容
It is critical to note that what is acceptable in one country for transfer pricing purposes may not be OK in another. The US has fairly liberal transfer pricing policies whereas many West African countries in particular are extremely strict. Most companies hire a single company to prepare a TPA, but a better policy is to get experts from multiple countries on a call together to find a reasonable policy that is viewed as fair in both sides of the equation. I have been the US side of many of these strategy sessions, but I’m always surprised that more companies don’t take this approach both with the opportunities for financial optimization and risk of tax consequences.

已翻译

赞

5 Seek professional advice

The fifth step is to seek professional advice, as transfer pricing is a complex and dynamic area that requires expertise and experience. You may need to consult with transfer pricing specialists, accountants, lawyers, economists, or other advisors who can help you design, implement, and defend your transfer pricing policies and documentation. You may also need to benchmark your transfer pricing against comparable transactions or companies, and use transfer pricing software or tools to support your analysis and calculations.

添加您的观点

6 Manage your currency and foreign exchange risks with transfer pricing

Transfer pricing is not only a tax compliance issue, but also a strategic tool that can help you manage your currency and foreign exchange risks. By using transfer pricing, you can align your intercompany transactions with your value chain and business model, and optimize your profitability and cash flow. However, transfer pricing also involves challenges and uncertainties, such as changing regulations, tax audits, and disputes. Therefore, you should always follow the best practices and seek professional advice when using transfer pricing to manage your currency and foreign exchange risks.

添加您的观点

Suhash Kantamneni

Transfer Pricing @ Danfoss | EY
举报内容
Identify exposure in value chain to foreign exchange (forex) risk. Based on functional characterization of transacting entities, entity that controls, decides on and can assume risks, typically the one earning residual profits must be assigned the forex risk. A simple way to deal with this is to transact in the currency of the limited risk bearing entity as much as possible. If not possible to transact in that currency, e.g., it is not tradeable, the forex loss or gain must be passed back to the entrepreneur.

已翻译

赞

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

添加您的观点

Financial Management

+ 关注

给文章评分

我们借助人工智能创建了此文章。您认为这篇文章怎么样？

很棒不太好

举报此文章

查看全部

How can you use transfer pricing to manage currency and foreign exchange risks?

1

2

3

4

5

6

7

1 Understand your value chain

2 Choose your transfer pricing method

3 Align your transfer pricing with your business model

4 Monitor and adjust your transfer pricing

5 Seek professional advice

6 Manage your currency and foreign exchange risks with transfer pricing

7 Here’s what else to consider

Financial Management

给文章评分

感谢您的反馈

更多Financial Management相关文章

更多相关阅读内容