The purpose of transfer pricing audits is to enhance tax security and optimize processes related to settlements between related entities.
The main task of the audit procedure is to determine whether challenges related to transfer pricing are managed correctly and to propose mechanisms to reduce tax risks associated with subsequent tax years.
The transfer pricing audit service is directed both to entities obligated to prepare tax documentation and to entities not subject to such obligations. Every transaction between related entities must be conducted on market terms, regardless of the obligation to prepare transfer pricing documentation.
To prevent incorrect accounting of transactions between related entities, a series of preventive steps are taken. The activities conducted by us as part of the audit include:
- identification of transactions carried out between related entities;
- identification of transactions subject to documentation requirements;
- verification (in terms of compliance with legal requirements) of the prepared documentation so far;
- analysis of transactions carried out with related entities;
- analysis of the established transfer price;
- identification of irregularities and tax risks;
- identification of transactions exempt from documentation requirements or benefiting from simplifications, e.g., identification of low-value-added services;
- recommendations for actions to increase transaction security and optimize operations (e.g., restructuring);
- verification and development of correction mechanisms (true-up);
- preparation of guidelines for future transactions.
The audit can cover any chosen period. The results of the audit are presented in the form of a report, the scope of which may vary depending on the client’s needs.
If you are unsure whether documentation obligations apply to you or what market price is, we encourage you to read our series of articles, where we explain step by step what transfer pricing documentation is and what obligations it imposes on taxpayers.