Transfer pricing is niche. It’s setting the prices for transactions between related entities within a corporate group, such as the sale of goods or services. Closely affiliated with tax law, it determines how profits are allocated across different jurisdictions, potentially reducing a company’s tax liability. It also aids performance measurement and helps manage risks associated with crossborder operations.
The value of effective transfer pricing to an organisation includes optimising cost efficiency, supporting strategic planning, ensuring regulatory compliance, gaining competitive advantage and maximising economic value added. Properly managed transfer prices can lead to improved profit margins and better overall financial performance, while avoiding penalties from tax authorities.
‘Transfer pricing offers a unique blend of intellectual challenge and career growth’
‘Transfer pricing offers a unique blend of intellectual challenge and career growth that I find particularly rewarding,’ says Peter Phan Wai Yuen ACCA, a transfer pricing manager at Deloitte Hong Kong. ‘One of the most appealing aspects is the opportunity for continuous learning and development. The field is constantly evolving due to changes in tax law, global economic trends and the shifting strategies of multinational corporations, which means there is always something new to learn and master.’
Career scope
Consultants advise clients on developing and implementing transfer pricing strategies that align with business goals and comply with tax regulations. Key responsibilities include preparing transfer pricing three-tier documentation, conducting economic analyses and benchmarking, assessing risks and assisting in controversy resolution, such as multilateral mutual agreement procedures and advance pricing arrangements. They must also ensure compliance with the OECD transfer pricing guidelines (base erosion and profit shifting) and local transfer pricing regulations.
‘My role also involves contributing to business development by identifying new opportunities and building client relationships,’ Phan adds. ‘As a transfer pricing manager, I must stay abreast of industry trends and participate in thought leadership activities. My work is central to helping clients navigate international tax complexities and maintaining my firm’s standing as a premier professional tax advisory firm.’
‘The ability to interpret and manipulate large datasets is becoming increasingly important’
Transfer pricing requires a proficiency in financial analysis to evaluate transactions, as well as a deep understanding of tax law, particularly international tax law, and OECD guidelines. ‘This allows practitioners to navigate the legal landscape and advise on compliant transfer pricing strategies,’ says Phan. ‘Additionally, the ability to interpret and manipulate large datasets is becoming increasingly important, as is the proficiency with technology and financial software, which aids in analysing and documenting transfer pricing arrangements effectively.’
Soft skills are equally important. Transfer pricing requires curiosity, given its dynamic nature and evolving practices and regulations requiring a commitment to continuous learning; an analytical mindset is crucial for solving the complex problems inherent to transfer pricing; you need to be patient and meticulous when working through often lengthy and intricate analyses and processes.
Transfer pricing is also a collaborative team effort. ‘We work closely with colleagues from various departments, including tax, finance and legal, as well as with external consultants and auditors,’ says Phan. ‘Effective communication and relationship-building skills are therefore essential for successful stakeholder management.
‘Being able to convey complex financial and tax concepts to non-experts and managing the expectations of all parties involved are hallmarks of a skilled transfer pricing professional.’
Getting in and getting on
ACCA provides a solid technical training for working in multinational corporations (MNCs), providing a foundation to the financial and tax principals that underpin transfer pricing, and specifically provides an introduction to the field in paper F5 Performance Management.
Professionals often enter the field directly as associates at mid-tier to large professional services firms, work their way across from audit or tax with some experience, or move from transfer pricing for MNCs into consultancy.
‘The specialism makes people valuable assets in MNCs or accounting firms’
It’s a relatively niche area, which therefore often requires candidates to have specific educational backgrounds, such as degrees in taxation, accounting, economics, finance or law. Advanced degrees or specialised training in international tax or transfer pricing are often seen as valuable additions.
‘The specialism makes people experts in international tax planning, consulting and compliance, making them valuable assets in MNCs or accounting firms. Their knowledge of crossborder transactions and tax implications is crucial for regulatory bodies, legal practices and corporate treasury functions,’ says Phan.
Professionals can aspire to leadership positions, such as becoming a tax partner at a Big Four firm, overseeing complex client engagements and providing strategic advice. This also opens doors to economic consulting, academia and roles within international organisations, as well as industry-specific opportunities that capitalise on their expertise in navigating the intricacies of international finance and tax law.
More information
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