TRANSFER PRICING
TRANSFER PRICING
Compliant Transfer Pricing Solutions
Transfer pricing is one of the most closely monitored and highly scrutinized areas of corporate taxation, especially for multinational companies. At CKH Group, we offer comprehensive transfer pricing studies to help businesses remain compliant, mitigate risk, and prepare strong documentation to defend against potential audits or scrutiny.
As a leading CPA firm headquartered in Atlanta, we provide full service transfer pricing support for businesses operating across state and national borders that is designed to:
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- Provide market-level pricing on intra-group transactions
- Mitigate risk of IRS or tax authority scrutiny
- Establish defensible documentation and analysis
- Support compliance across multiple jurisdictions
What Is Transfer Pricing?
Transfer pricing refers to the pricing of goods, services, or intellectual property exchanged between divisions of the same company, especially across state our country lines with different tax jurisdictions. Without proper documentation, these internal transactions can raise red flags for tax authorities looking for signs of tax avoidance through profit shifting.
Transfer pricing rules ensure that these intercompany transactions reflect arm’s-length pricing, or the price that would be charged between unrelated parties in a similar market. The goal is to ensure that profits are reported where economic value is actually created.
What Is a Transfer Pricing Study?
A transfer pricing study is the aforementioned ‘proper documentation‘ that a company can use to protect themselves from the hefty penalties a company can incur through improper or tax avoidant transfer pricing methodologies. While this study does not automatically remove the risk of an audit, it can provide solid support for the positions taken, reduce the risk of penalties, and establish reasonable cause and good faith to increase the possibility of penalty relief in the event of a tax controversy.
Our Solutions
All of our solutions support compliance with IRS and OECD guidelines to reduce the risk of being penalized. A Transfer pricing study can be prepared proactively or within the one-year window before formal reporting is required. However, once you’ve created a study, it is important that you maintain it to market changes. Usually, this means updating the study annually.
Turnkey Transfer Pricing Study
Our comprehensive, end-to-end solution includes all required components for a defensible transfer pricing analysis and study. This is ideal for companies establishing new documentation or undergoing restructuring.
Our full study includes:
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A detailed description of the corporate group and entities involved
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Clear definitions of the transactions under review
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Industry and economic analysis
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Assessment of pricing methods/selection of the most appropriate
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Execution of the transfer pricing study using approved databases and models
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While timeline can vary greatly depending on complexity, this typically can be conducted between 4-5 months.
Why is transfer pricing so heavily scrutinized? What are the consequences for illegal transfer pricing methods?
Tax authorities such as the IRS closely examine transfer pricing to detect and deter abusive practices. One of the most common ways to abuse it is through shifting profits from high-tax to low-tax jurisdictions through manipulated internal pricing- usually lower than market price. The consequences for doing so are not to be taken lightly. It can trigger audits, tax reassessments, and penalties of up to 40% of the additional tax owed.
Some of the most notable tax disputes in U.S. Tax Court History have been the result of transfer pricing, emphasizing how vitally important it is for a company to conduct and maintain an updated study if they want to sell goods between divisions of the same company. For example, in 2006, GlaxoSmithKline agreed to a $3.4 billion settlement with the IRS over transfer pricing disputes related to the allocation of profits from U.S. operations. This case remains one of the largest tax settlements in IRS history.
These regulations also apply within the United States, between states, making compliance essential even for domestic multistate corporations.
What is the Arm’s Length Rule?
The arm’s length rule is a principle discussed at length in The Organization for Economic Co-operation and Development (OECD) guidelines that states when pricing the transfer of goods for services between companies with joint ownership, they should treat the transaction “at an arm’s length,” as in, as if it were taking place between unconnected parties. In other words, they can’t artificially lower or inflate prices, and must instead emulate market conditions as closely as possible to attain a fair market price. The intention, according to OECD guidelines, is to reduce as much as possible the creation of unfair tax advantages.
However, this principle can sometimes be more of an art than a science, with intended or unintended misuse of it leading to illicit flows out of developing countries- and again putting you in a tricky spot with tax authorities. This is why it is important to conduct an extensive study to determine the best method for approaching transfer pricing that will reduce your risk of going against OECD’s guidelines.
Why Choose CKH Group?
At CKH Group, we combine in-depth regulatory knowledge with a risk-aware, ethical approach to transfer pricing. We help clients reduce exposure, avoid documentation gaps, and navigate IRS regulations confidently.
Our expert team leverages trusted databases and industry benchmarks to deliver accurate, research-backed transfer pricing studies. Whether you’re setting up documentation for the first time or updating an existing one, CKH Group is your trusted partner for managing tax risk effectively.
With CKH Group, you’re not just getting a CPA firm; you’re gaining a trusted partner committed to your success. Contact us today to explore how our Tax Services can add value to your organization.
