Transfer Pricing - Tax Controversy and Dispute Resolution

With more and more countries introducing formal transfer pricing documentation requirements one can expect to see a surge of transfer pricing audits resulting in tax controversies going forward.  As companies increasingly focus on globalising their operations and OECD stepping up its efforts on sharing information across jurisdictions, it is imperative for them to consider transfer pricing issues carefully while structuring their business operations.  With tax authorities becoming more sophisticated, audits can be thorough and enforcement actions too harsh.

Singapore tax authorities have also introduced transfer pricing consultation procedure in Singapore whereby they are trying to emphasize the importance of transfer pricing documentation in Singapore.  This process is a pre-cursor to transfer pricing audits.  The tax authorities have also started transfer pricing audits and examinations for some of the taxpayers they consider to be high risk.

This new environment therefore requires multinational corporations to take proactive, coordinated steps to understand their transfer pricing arrangements and documentation requirements.  Disputes and audits must be avoided, managed, and resolved.  All issues must be coordinated and aligned across jurisdictions before they develop into larger business concerns.

How PwC can help

  • Tax dispute avoidance techniques 

You need to know whether and where any transfer pricing audit exposure exists.  We can help you implement sound policies and processes that may provide a defensible model, and help safeguard against tax audits and disputes.  We can conduct reviews of your documentation and inter-company agreements, analyse and identify your opportunities to reduce tax and penalty exposure, and recommend “best practice” policies for your related-company transactions.

  • Tax audit management practices 

We can recommend processes to manage your transfer pricing audits and examinations, which may reduce the risk of income adjustments and avoid escalation of more involved disputes.  Our team of professionals in Singapore has assisted many taxpayers during the transfer pricing consultation stage and also during the subsequent audit stage.  We can help you craft a strategic response to taxing authority requests.

  • Tax dispute resolution alternatives 

We can work with you at both the global and local level to implement practices that may reduce or eliminate the likelihood of prolonged disputes or litigation.  Many of our professionals come to us from prominent positions in academia, industry and government.  This highly strategic experience places PwC in a strong position to help you identify technical issues, analyse findings, prepare presentations, and assist in the resolution of any disputes. Our team of professionals in Singapore has been involved in significant number of advance pricing agreements (APAs) and Competent Authority (CA) negotiations, specifically at bilateral levels. Our team is also currently involved in assisting taxpayers with their bilateral APAs and CA negotiations with countries like Japan, China, Taiwan and Australia.  As of last year, our team was involved in almost half the bilateral APAs and CA negotiations which Singapore was undertaking with overseas CAs. Our team also has significant experience with unilateral APAs in Singapore.  We can assist with all aspects of your advance pricing agreements (APAs) and Competent Authority negotiations.

  • Global strategic planning of tax audit and disputes

We are well positioned across our member firms to help you develop a global strategy for avoiding or managing any future transfer pricing disputes or examinations.  In addition to advising on the proactive use of APAs, we can recommend strategies consistent with your goals that utilise foreign tax credits, separate country net operating losses, foreign currency positions, tax holidays, and other tax attributes.