COVID-19: A perspective on transfer pricing

COVID-19: A perspective on transfer pricing

Tim Sarson discusses the challenges of operating models and transfer pricing (TP) for multinational businesses in the new reality.

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Tim Sarson

Partner, UK Head of Tax Policy

KPMG in the UK

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“TP is set up for the good times, it’s set up for the sharing of profit across a multinational in a fair and equitable way. What happens when there is no profit in the system?”

In our new reality video, Tim Sarson, Partner Global Transfer Pricing Services, considers the short and long-term challenges affecting transfer pricing, as the world begins to emerge into a new way of working.

Short-term

Businesses need to review the basic economics. Ordinarily, the biggest questions are; where should the profit sit? How is it apportioned? What happens if there is no profit? This isn’t our first economic crisis, so we need to look back and understand what lessons we can learn moving forwards

Long-term

With online sales dominating the landscape, supply chains are getting shorter with a greater focus on security and flexibility, which will likely mean a restructure of the pre-COVID operating model. By far the biggest change has been the need for a ‘virtual organisation’, one which will likely remain in one form or another – this too needs to form part of a business’s restructure.

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