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Transfer Pricing

Often the price at which assets and services are transferred between related parties will lead to the most favorable worldwide income tax result if the price is set at a rate which most closely alighns with the arms length standard, as accepted by the affected tax authorities. Consequently, conforming to the arms length standard can, in itself, be an effective tax reduction strategy.

That said, Twenty First Century transfer pricing policy setting has more to do with adherence to the arms length standard than to manipulation of prices in an effort to capture income in low tax jurisdications. True enough, tax cost considerations can influence the jurisdictional placement of assets, but with the widespread adoption of hard hitting abuse penalties, coupled with material penalty assessments for documentation failures, non-compliance costs weigh heavily away from income shifting driven planning in favor of arms length compliant pricing and proper documentation.

NEOITG offers full IRS and OECD compliant documentation packages. Additionally, NEOITG provides assistance with arms length price setting in basic buy / sell and commission arrangements.