The OECD / G20 – BEPS regulation deals with policies that exploit disparities in tax rules that artificially shift profits to low or no-tax locations. Non-compliance causes serious penalties, and thus, multinational companies must adapt and streamline their intercompany financing activities. BEPS requires companies to price their intercompany finance transactions ‘at arm’s length’. To prove that these transactions are consistently priced, Corporate Treasurers and Tax Directors need to clarify their rationale for structuring their intercompany finance transactions by:
1. Analyzing subsidiary’s balance sheet and P&L statement
2. Determining stand-alone subsidiary credit rating
3. Applying qualitative and/or group support adjustments
4. Looking up credit spread to set arm’s length price.
Learn how to implement a consistent approach to determine a fair and competitive interest rate for transactions such as intercompany loans, credit facilities, guarantees, cash pooling and leases. Attendees will take away best practices and insight in the 4 steps to approach the pricing of intercompany finance transactions. Practical guidance is provided how multinational companies can implement ‘arm’s length’ transfer pricing documentation for intercompany finance transactions.