As European countries begin to ease their lockdowns, the policies implemented to alleviate the impact of COVID-19 on public health are still resulting in significant operational disruption for many multinational companies.
These include staff shortages due to quarantine, limited operations of factories and logistics infrastructure, and other supply chain difficulties leading to volatile levels of demand and supply. The recent plunges in the global stock market are a reflection of the uncertainty shared by many companies on the duration and pathway to public health and economic recovery.
These challenges create significant financial and operational risks for companies across the value chain, necessitating bold decisions on how to prioritize activities, generate liquidity, mitigate risks and allocate resources. We explore the action companies should take now to position themselves in a post-COVID-19 world.
Companies need to navigate the immediate impact of COVID-19 while determining the best approach for long-term performance. This involves promptly implementing measures which can provide some initial relief while anticipating the longer-term risks, consulting internal and external stakeholders, and planning sustainably for the future.
As well as revising forecasts and business continuity plans, companies will need to review their multinational transfer pricing planning based on the impact of the pandemic to their operations in order to avoid heavy tax burdens.
Five key steps to achieve sustainable long-term performance include:
Proactive transfer pricing planning is key to mitigating risks and leveraging opportunities to manage the value chain and ensure a sustainable business model post-COVID-19.
As part of their recovery plan, organizations should consider the following aspects:
In determining the most appropriate approach, companies have been able to leverage on KPMG’s practical approach for support: