Transfer Pricing to Avoid (or Limit) Double Taxation

Neufeld Legal PC: Chris@NeufeldLegal.com - 403-400-4092 / 905-616-8864

Transfer pricing is premised on avoiding (or limiting) the incidence of double taxation that can arise when good, services and/or intangibles are transferred between related parties across international borders. In the process of seeking to minimize the incidence of taxation incurred by a multinational corporate operation, it becomes necessary to appropriately price the transaction on the basis of parties operating at arm's length and thereby be in compliance with the respective countries transfer pricing rules (as opposed to seeking to circumvent those rules and thereupon being subject to considerably more severe financial penalties).

Given this increasingly bureaucratic challenge to multinational companies, including that of transfer pricing — the practice of establishing arm's length prices for related party cross-border transactions — it is becoming increasingly important that appropriate legal representation and guidance be retained. Global tax authorities continue to enact legislation to ensure taxpayers uphold the arm’s length principle in all related-party transactions. Stricter penalties, new documentation requirements, increased information exchange and better trained audit staff make transfer pricing a more contentious issue.

Effective tax planning is essential to maximizing business and personal wealth, as it can provide a legitimate means to structure your corporate, family and personal affairs so as to reduce your tax burden. This is achieved through intelligent, transparent tax strategies that are consistent with the Income Tax Act (Canada) [and other pertinent tax laws] and are intended to withstand Revenue Canada scrutiny.

For knowledgeable and experienced tax law representation with respect to the Canadian dimension to your international transfer pricing obligations, contact tax lawyer Christopher R. Neufeld at Chris@NeufeldLegal.com or call 403-400-4092 (Calgary, Alberta) / 905-616-8864 (Toronto, Ontario).

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