By: Ben Miller | 09/29/16
The Organization for Economic Cooperation and Development’s (“OECD’s”) Base Erosion and Profit Sharing (“BEPS”) has resulted in the worldwide implementation of more stringent requirements for justifying transfer pricing policies and preparing appropriate transfer pricing documentation. The BEPS new disclosure requirements coupled with tax authorities’ increased scrutiny of economic substance places a newfound emphasis on a company’s ability to develop and document an accurate and informative value chain analysis.
While this skill will be paramount when planning and defending transfer pricing guidelines in the future, guidance from the OECD and tax authorities regarding the preparation of transfer pricing value chains is remarkably limited. Moreover, identifying and defining value chains has not historically been of such importance. With this in mind, our team at BT compiled some a transfer pricing documentation template and example on conducting a value chain analysis.
Great question. A transfer pricing value chain analysis is a valuable exercise for taxpayers and transfer pricing professionals alike. It helps give perspective on the way a business functions and how each component of the business contributes value to the whole. Our BT value chain 5 step process spans from gathering and organizing necessary information to ultimately defining the value chain(s) that underpin a multinational operation.
Information requirements achieved via a value chain analysis include:
For more information on conducting a value chain analysis or for any transfer pricing questions, please contact Ben Miller by calling 770.396.2200.
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