Transfer pricing services
Our transfer pricing team is willing to discuss emerging transfer pricing issues and promote brave solutions in transfer pricing practice
In recent years, TP has become a key area of international taxation facing multinational enterprises and tax administrations.
TP requirements mainly apply to cross-border transactions. If a multinational group enters the Latvian market, e.g. by establishing, merging or acquiring a Latvian subsidiary or creating a permanent establishment (PE) in Latvia, and that subsidiary or PE makes transactions with other group companies (or with any other persons such as family members or significant individual shareholders), the prices applied in those transactions may directly affect how the profit or loss of related parties is measured, and it is important to disclose how those prices are set in practice.
So the transfer prices of a multinational group with a taxable presence in Latvia are governed by Latvian tax laws.
PwC transfer pricing services:
- Transfer Pricing Documentation Preparation
- Financial Data Segmentation for Transfer Pricing
- Legal Form Review of Controlled Transactions
- Benchmarking Studies for Transfer Pricing
- Transaction Documentation for Latvian Related‑Party Transactions
- Transfer Pricing Policy Preparation
- Transfer Pricing Policy for Financial Transactions
- Advance Pricing Agreement (APA) Support
- Transfer Pricing Risk Assessment
- Representation in Tax Authority Consultations
- Permanent Establishment Profit Allocation
- Country‑by‑Country Reporting Support
Transfer Pricing Documentation Preparation
Transfer pricing documentation is essential for demonstrating that controlled transactions follow the arm’s length principle and that the company’s tax position is accurately stated. We prepare Master File, Local File or simplified TP documentation, ensuring that data is current, reliable and compliant with OECD guidelines and local regulations. Our team reviews intra‑group transactions, functional profiles and economic substance to produce clear, defensible documentation that strengthens compliance and supports constructive dialogue with tax authorities.
Financial Data Segmentation for Transfer Pricing
A clear segmentation of financial data is essential for identifying the true profitability of controlled transactions. We help separate relevant revenues and costs, build segmentation models and ensure alignment with TP methodologies. This enables companies to understand transaction‑level profitability and supports reliable TP analyses that stand up to regulatory scrutiny.
Legal Form Review of Controlled Transactions
We analyse the legal form and substance of controlled transactions to ensure that contractual terms reflect actual business conduct and risk allocation. By reviewing agreements, communication and functional responsibilities, we help uncover potential TP risks and strengthen the consistency between documentation and economic reality, improving defensibility during tax authority reviews.
Benchmarking Studies for Transfer Pricing
Benchmarking provides objective evidence that controlled transactions are priced at arm’s length. We prepare benchmarking studies for goods, services, financial transactions and intangible assets using reliable databases and standardised methodologies. This supports compliance, strengthens documentation and reduces exposure to potential TP adjustments.
Transaction Documentation for Latvian Related‑Party Transactions
We prepare transaction documentation for controlled transactions between Latvian resident related parties, including functional analyses, economic substance assessments and comparable data. This ensures that intra‑group fees are well supported and compliant with local TP legislation, providing a solid basis for discussions with tax authorities.
Transfer Pricing Policy Preparation
A clear TP policy provides a consistent and efficient framework for pricing related‑party transactions across the group. We develop policies that define functional roles, risk allocations and pricing approaches, helping companies maintain compliance, reduce administrative burdens and ensure alignment with regulatory expectations.
Transfer Pricing Policy for Financial Transactions
We assist with developing TP policies for financial transactions, including intra‑group loans and financing arrangements. Our services include preparing credit rating analyses, determining arm’s length interest rates and conducting benchmarking. This ensures financial transactions are priced consistently and in line with local and international TP requirements.
Advance Pricing Agreement (APA) Support
Advance Pricing Agreements (APA) offer long‑term certainty by agreeing TP methodologies with tax authorities in advance. We support businesses throughout the APA process — from analysing transactions to preparing documentation and facilitating communication. This structured approach helps minimise TP risks and ensures clarity for future periods.
Transfer Pricing Risk Assessment
A TP risk assessment helps uncover gaps that may attract tax authority attention. We review existing documentation, evaluate compliance with local requirements and identify areas of potential concern. Our recommendations provide a clear path to strengthening TP positions and reducing uncertainty during audits or consultations.
Representation in Tax Authority Consultations
We represent clients in advanced TP consultations with the tax authority, helping to prepare materials, participate in meetings and articulate positions clearly. Our involvement supports transparent communication, reduces uncertainty and ensures that TP matters are addressed professionally and effectively.
Permanent Establishment Profit Allocation
We assist with determining profit allocation for permanent establishments, analysing activities, cost structures and relevant functions. Our approach ensures alignment with local legislation and double tax treaties, reducing the risk of double taxation and strengthening cross‑border compliance.
Country‑by‑Country Reporting Support
We support multinational groups with preparing and submitting Country‑by‑Country Reports and required notifications. Our services help ensure compliance with Latvian and international transparency rules, improve data accuracy and streamline the reporting process.
Risks associated with incorrect transfer pricing:
- Reassessment of local taxes – with significant penalties and interest on overdue tax and with
- Double taxation of income where a double tax treaty offers no relief
- Uncertainty about your tax burden and costly, lengthy conflicts with supervisory authorities
- Damage to your reputation and corporate brand
Our global team of more than 3,100 transfer pricing experts use their expertise in helping our clients around the world to execute successful transfer pricing transactions and to resolve challenges as they arise.
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