In this two-part episode of Beyond the Ledger, host Shardae Layfield sits down with Abbas Raza and Kyle Ergle of Bennett Thrasher’s Transfer Pricing practice to unpack one of the most complex and high-risk areas of global tax strategy: transfer pricing. Across both conversations, they break down the fundamentals of intercompany transactions, explain how transfer pricing impacts compliance and business operations, and walk through real-world challenges companies face when pricing intercompany services

Listeners gain clarity on how transfer pricing works in practice- from understanding the arm’s length standard and benefits test to determining service fees, allocating costs, and avoiding common pitfalls that draw scrutiny from tax authorities. Abbas and Kyle also share practical guidance on documentation, benchmarking, and best practices that help businesses reduce risk, stay compliant, and support sustainable global growth

Takeaways

• Transfer pricing governs how value is exchanged between related entities.
• The arm’s length standard is foundational to transfer pricing compliance.
• Intercompany services must provide a demonstrable benefit to be compensable.
• The benefits test helps determine whether a service should be charged.
• Cost-plus pricing is a common and practical approach for service transactions.
• All direct and indirect costs must be considered when calculating service fees.
• Shared services increase complexity and require careful cost allocation.
• Documentation is critical for audit defense and penalty mitigation.
• Common mistakes include failing to charge service fees or mischaracterizing services.
• Clear policies, benchmarking, and consistent support help reduce transfer pricing risk.

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