Risk and Transactions Assessment
In order to avoid tax risks, we must first of all know them
At the time of transmission of the transfer pricing offer, we carry out a preliminary risk analysis according to the model used by tax inspectors. Thus, based on the following indicators:
- Volume of intra-group transactions in total turnover / purchases,
- Profitability indicator (positive, negative),
- Prescription period and last general fiscal inspection,
we can estimate a prior adjustment risk in terms of transfer prices.
After carrying out the comparability analysis, we can calculate the amount of the voluntary adjustment that the taxpayer can make in order to reduce the risk of tax adjustment in the event of a tax audit.
The voluntary adjustment made by the taxpayer at the end of the year can almost completely reduce the transfer pricing risks that may occur at the time of the tax inspection.
The risk analysis also involves the following actions:
- Mapping (identification) of all intra-group flows carried out by the analyzed company,
- Drafting intra-group contracts, where applicable,
- Identification of the transfer pricing method applicable to each intra-group transaction,
- Preparation of comparability studies according to the selected method,
- Determination / quantification of adjustment risks in case of fiscal control,
- Determination / quantification of voluntary adjustments to eliminate / reduce adjustment risks by tax inspectors.
More on the types of transfer pricing adjustments here.
Cabot Transfer Pricing evaluated the intra-group flows of over 50 companies – local subsidiaries of international or Romanian groups. Our recent projects are presented here.