Archive for Guy Sanschagrin

Deferred DISC Income – How Does It Work?

This is one of the most misunderstood provisions in the IC-DISC area. An IC-DISC shareholder is required to pay an interest charge to the IRS on the tax liability related to the deferred DISC income, so this concept is important and, as stated above, greatly misunderstood. The three most misunderstood concepts are i) what is “deferred DISC income at the end of the computation year”, ii) how are the IC-DISC earnings and profits distributed, and iii) in what order are DISC earnings distributed?

This is one of the most misunderstood provisions in the IC-DISC area. An IC-DISC shareholder is required to pay an interest charge to the IRS on the tax liability related to the deferred DISC income, so this concept is important and, as stated above, greatly misunderstood.

The three most misunderstood concepts are i) what is “deferred DISC income at the end of the computation year”, ii) how are the IC-DISC earnings and profits distributed, and iii) in what order are DISC earnings distributed?

First let’s examine the definition of deferred DISC income at the end of the computation year. This is defined in the regulations as the accumulated DISC income at the end of the prior year. It is not the accumulated DISC income at the end of the current year. The deferred DISC income is always computed on a one-year lag basis.

For instance, a brand-new IC-DISC can’t have deferred DISC income at the end of its first year.
Read More

Written by | Posted in Deferred Disc Income

ALERT: Now Is Not The Time To Ignore Transfer Pricing

SCOTT SMAISTRLA

COVID-19 necessitates a reassessment of the existing transfer pricing paradigms of Multinational Enterprises (MNEs). Virtually all industries will be adversely affected by the global COVID-19 pandemic. In addition to the impact of a global recession, there will be disruptions to supply chains and reductions in consumer demand. MNEs will face new challenges such as enabling personnel to work remotely and relocating personnel across borders at a time when movement is restricted by governments. These disruptions will erode the profit margins for many companies, potentially requiring MNEs to make significant adjustments to operating returns for the fiscal periods impacted by the COVID-19 pandemic.

In addition, we can anticipate that transfer pricing audits will surge in tax years where MNE profit margins have been adversely affected by COVID-19. MNEs must be prepared to explain to tax authorities that their transfer pricing arrangements were arm’s length during this period and that the unique and extraordinary adverse factors associated with COVID-19 caused unexpected losses. This discussion is especially important if the MNE’s transfer pricing policy is based on any entities in the chain achieving set target profit margin(s) that they will not achieve due to the adverse economy. It is essential for MNEs to document their transfer pricing arrangements now, including a discussion of the key factors to prepare for possible audits covering the COVID-19 tax years.
Read More

Written by | Posted in TaxConnections

Maintain Corporate Transfer Pricing Processes Remotely

How To Maintain Corporate Transfer Pricing Processes Remotely

Companies are instructing whole departments to work from home, and the traditional workplace is increasingly reserved for jobs that cannot be performed remotely. This presents challenges for MNEs, especially at the headquarters level, such as keeping information and workflows organized, and maintaining effective communication and collaboration between stakeholders and ‘gatekeepers’ in different departments of global entities.

These challenges are pronounced in MNE transfer pricing teams due to the global nature of intercompany transactions and the local country functions, assets and risks, which are the factual foundation for analyses. Transfer pricing processes require a large amount of information that is commonly housed in disparate IT systems, databases, and in the minds of key personnel (and often on their local hard drives). If demand continues to weaken, companies will increasingly shed workers, and sooner or later this could lead to the loss of knowledge and information that is critical for maintaining effective transfer pricing processes and documentation. MNEs would be wise to think about and invest in transfer pricing information and process management systems, since these effectiveness-improving systems increasingly act as continuity management systems -especially in the current climate.
Read More

Written by | Posted in Remote SaaS • Transportal

Learn How To Remotely Maintain Transfer Pricing Using Transportal

Maintain Transfer Pricing Remotely Using Transportal

As organizations learn how to set up management of their global transfer pricing remotely, they are quickly moving to Transportal. This software as a service management platform provides a comprehensive solution to: Organize global transfer pricing information in one place; Collect data, perform research and analyze your transfer pricing risks; Update your transfer pricing documentation (Master and Local Files) efficiently; Collaborate with colleagues across the globe to coordinate joint efforts; Validate transfer pricing documentation by transfer pricing specialists.

This transfer pricing software manages risks by following the OECD Transfer Pricing Guidelines and complying with local requirements. This software makes it easy for corporations and consultants to collaborate online from a single dashboard and deliver transfer pricing service and support. Request a demo today at http://www.trans-portal.com/product.html

Have a question? Contact Guy Shanschagrin.

Written by | Posted in Transfer Pricing Software
  Recent Entries »