Cosmos International Management Co., Ltd.



Service (Transfer Pricing & International Tax Consulting)


Transfer Pricing Consulting:
Documentation

(1) Preparation of full-scope TP documentation
In many countries where the transfer pricing taxation regulations exist, taxpayers are required to prepare transfer pricing documentation which shows that cross-border related-party transactions are priced at arm's length by the corporate tax return filing deadline. However, in many countries without the documentation requirement like Japan, taxpayers are still expected to prepare transfer pricing analysis to justify their related-party transactions at arm’s length, document the result of the analysis, and submit when tax authorities normally request at tax examination. The risk of tax adjustment increases substantially in case of not preparing / not able to submit documentation, and if being tax-adjusted, interest and high rate of penalty may also be levied. Therefore, if taxpayers have overseas affiliates with relatively high transfer pricing risk and located in a country with transfer pricing regulations, it would be recommended that the affiliates prepare transfer pricing documentation for future tax examination defense purpose.


(Typical contents included in documentation)

  • Facts (overview of company, business and transaction)
  • Functional analysis (functions, risks and intangible assets)
  • Selection of best transfer pricing method
  • Transfer pricing analysis based on the chosen method, and the result

Cosmos-TPA alliance provides full-scope documentation, which fully comply with local transfer pricing regulations including the translation to local language.


(2) Preparation of limited-scope (simplified) TP documentation
In countries with the documentation requirement, some exempt (e.g., transaction amounts are below threshold) taxpayers are not legally required to prepare documentation. However, even in that case transfer pricing taxation risk is not exemplified. If transfer pricing risk is regarded as high, exempt taxpayers still may have to voluntarily prepare transfer pricing documentation. In such cases, there are many situations that taxpayers can reasonably manage and reduce risks by preparing not full-scope but simplified or limited-scope documentation with less effort. We also advise and provide such cost-effective limited-scope documentation.


(3) Preparation of economic analysis portion of TP documentation
Recently more companies try to prepare transfer pricing documentation on their own. The most specialized and difficult part of the documentation for normal taxpayers is economic analysis part including selection of best transfer pricing method and transfer pricing analysis. For these companies we provide conducting economic analysis to help them complete the full documentation.

Please contact us for the detail of our documentation services.

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