Kitabı oku: «Transfer Pricing in International Markets: Problems of Information Support», sayfa 4

In this case one of the most important and at the same time difficult stages is the organization of full-fledged document flow for the purposes of TP and the subsequent analysis of the collected and documented information.

In the system of financial and management accounting, an optimal document flow system should be formed. Its aim is to permanently ensure high quality results of analyzing TP to prevent potential losses from improper application of TP rules (or non-compliance with them) by the enterprise.

It is reasonable to use the list of basic information, including the following minimum as suggestions for creating an optimal document flow system:

– Arrays of data on controlled transactions, as well as transactions that may become potentially controlled,

– List of related persons,

– List of sources of information for the marketing analysis for the purposes of TP,

– Price information about the goods (works, services) that are subject to controlled transactions, and

– Parameters (indicators/conditions) of transactions to be monitored, except for prices, etc.

It is reasonable to create, to a certain extent, unified forms (templates) of in-company documents that would provide a three-tier approach in relation to data formation: Level 1 is the level of a group of companies, Level 2 is a private enterprise, and Level 3 is a controlled transaction. Various aspects related to TP are subject to the analysis. Therefore, it is reasonable to develop templates for the analysis regarding:

– Package of agreements (contracts), including foreign economic that imply controlled and potentially controlled transactions, – Schemes (regulations) of standard processes and the use of documents for the benchmark study, functional analysis, TP risk analysis, economic analysis of controlled transactions and TP documents flow, and

– Information exchange on TP issues between structural units of the company, as well as within the group of companies.

The documents regulating the functioning of the TP document flow system in the enterprise are of particular importance in the in-company documents system. They should include:

1) Provision (order) on the regulations (description) of the policy and internal control of the company’s (or group of companies) TP and the requirements and rules for the preparation, authorization, control, and archiving of documents and other information used to further make reports on controlled transactions and TP documentation,

2) Package of job descriptions that specify duties, tasks and functions of individual officials who should participate in the formation, verification, adjustment, maintenance, storage of TP documentation, as well as in the preparation of the Report on controlled transactions,

3) Forms of management reports on regulating the information on controlled transactions, and

4) Schedule for the preparation of Reports on controlled transactions and TP, etc.

The development and continuous testing and evaluation of the effects of controlled transactions in the TC system for the purposes of internal control are of great practical importance.

In general, the conclusion regarding the evaluation of such transactions should be based on:

1) Evaluation of transactions for the compliance with the definition of the term “controlled” in accordance with the tax legislation,

2) Functional and economic analysis of indicators,

3) Substantiation of applying a particular method of determining the transfer price, and

4) Preparation of a reasoned selection of components to form a range of prices (search for comparable transactions and individuals, carrying out a benchmark study), profitability evaluation, etc.

These stages will make it possible to substantiate the conclusion that the terms and conditions of controlled transactions comply with the “arm’s length principle”.

In recent years in the economic literature there have been attempts to develop guidelines for forming a system for TP documenting and substantiating controlled transactions.

According to the authors, it is possible to single out a number of basic steps for preparing TP documentation.

The first step is to study information about the related persons of the company and the place of the enterprise in the group of such related persons. In this case, contracts with contractors are subject to the study to determine the relatedness of persons and to develop a substantiated conclusion.

At this stage, it is desirable to study the structure of the company, make a full list of related individuals, describe the company’s activities, make a competitive analysis, describe the market for goods, works and services on certain reviews of transactions that are controlled, and describe approaches to pricing by specifying the method of pricing, costs included in the price, etc.

At the second stage, a functional analysis is carried out. Based on it, in the future methods for determining transfer prices can be reasonably chosen.

In this case, the functions fulfilled by the parties involved in a controlled transaction are analyzed. For this analysis, technological maps, as well as other information sources are used.