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In line with new developments in BEPS and the OECD regarding transfer pricing, both the IRS and CRA are increasing their scrutiny of cross-border transactions between related parties.
As a result, small and medium-sized businesses are experiencing an increase in transfer pricing audits. Our methodology is to group transfer pricing transactions into the following general areas:
Our experience is that the IRS and CRA have focused primarily on the first three areas when performing transfer-pricing audits. The CRA is applying the OECD guidance and requires companies to establish transfer pricing agreements that conform to OECD transfer pricing guidelines. These agreements must provide economic support of arm’s length terms, requirements to include OECD transfer pricing guidance to include the treatment of “cash boxes” affecting outbound financing of foreign subsidiaries of Canada multinationals and BEPS’ proposed simplified approach to low value-adding services.
OECD Action 13 has been implemented and requires corporate groups with annual consolidated revenues exceeding €750 million to maintain:
US reporting requirements are set forth in the Treasury Regulations and are also similar to the OECD transfer pricing.
UHY Victor has expertise dealing with Canada/US transfer pricing issues. Contact us for a consultation regarding your transfer pricing situation:
UHY Victor LLP Canada U.S. Tax Team