What are transfer pricing consultant roles and responsibilities?

Transfer pricing is the mode of fixing of the price of the goods and services sold between controlled legal entities within an enterprise. Say for e.g. if a subsidiary company sells goods to a parent company, the cost of those goods paid by the parent to the subsidiary is the transfer price.

Transfer pricing consultant plays the key role by providing assistance to the transfer pricing leaders in the advisory services.  The consultant works on variety of international compliance, research, consulting and planning issues and provides expert advice to the foreign multinational companies on the tax implications of their operations in the region.

If you are planning about enlisting the help of transfer pricing consultant but have doubts whether to proceed with or not, then it is better to understand the role and responsibilities of this expert and what benefits he/she will bring to your organization in terms of optimization of intercompany transfers and global profit allocation.

The consultant’s roles and responsibility move around 3 vital aspects:

1. Ensuring the compliance with the guidelines laid down for the transfer pricing:  -it big or small. Many companies often face a big compliance burden in this aspect. It is very challenging to produce transfer pricing documents that are both synchronous and compliant with filing requirements and huge penalties are often levied if the tax payer’s transfer pricing documents do not comply with the local tax regulations and other guidelines. Tax payers have to decide if they need to take reserves for uncertain tax positions on their financial statements and this can be tough to chalk out without proper experience in the acumen. Here is when the expert transfer pricing specialist can be of great help as he/she understands the industry and transfer pricing risks like no one else and thereby provide penalty protection and decrease the risk of an audit or any sort of dispute by the tax authorities.
2. Planning and optimizing the transfer price policies: Companies often hire the consultant when certain matters like alteration of supply chain, development of new product, acquisition of new intellectual property, restructuring of the business, occurring of divestiture etc in the business changes as the consultant ensures that the tax payers makes smart decisions regarding transfer pricing  and ensure positive outcome. With experience, the consultant chalks out appropriate and careful transfer pricing plans that result in optimum financial performance.
3. Resolving disputes: A transfer pricing expert is valuable in situations where the tax authorities audit or evaluate the tax policies and documentation of the company. And for this one must have the right representation when the transfer policy of yours is being challenged.

It is advisable to hire transfer pricing consultant from the beginning as he/she best knows how to respond to requests for information and how to present a business in the correct manner for grabbing an ideal outcome.