Governments and central banks around the world are struggling to address the COVID-19 pandemic and its impact on the economy. While certain governments may mitigate the crisis by doing whatever it takes, businesses are still required to operate and transact with their international affiliates at arm’s length as prescribed by their local transfer pricing rules.
For many companies, the COVID-19 pandemic is causing important supply chain and operational disruptions, and is reducing system-wide profits. Despite governmental measures and stimulus, the financial impact may be even greater for parent companies of local subsidiaries operating as limited-risk distributors or service providers and earning a guaranteed return. Under the current circumstances, it may be appropriate to share losses among different members of a global group depending on functional profiles and where the economic risk is ultimately borne.
This article, part of Baker McKenzie and Bloomberg Tax’s Special Report, provides companies with practical tips and identifies issues that may need to be addressed given the uncertainty caused by the COVID-19 pandemic.
Christopher (Chris) S. Raybould is the Canadian Transfer Pricing Practice Leader and Director of Economics for Baker McKenzie in Toronto and previously served as a member of the firm’s North American Transfer Pricing Steering Committee.
Mr. Raybould handles transfer pricing advisory work in various capacities. He advises on and assists in negotiating advance pricing arrangements, pursuing competent authority assistance, provides audit defense representation, appeals support, and Transfer Pricing Review Committee representation. He also advises on a variety of other types of transfer pricing projects, including BEPS related advice, risk identification and assessment, planning and compliance studies, and assists with the transfer pricing aspects of business conversions and restructurings, acquisition due diligence and integration.
Mr. Raybould has extensive experience in a number of industry sectors including automotive, pharmaceutical, food, financial investments and products, manufacturing, consumer businesses, technology, and commodity-based businesses. Mr. Raybould is an author on transfer pricing issues and a frequent speaker.
Stephanie's practice focuses on the Canadian tax aspects of corporate mergers, acquisitions, divestitures, reorganizations, financings and other tax planning in both the international and domestic contexts. Stephanie has particular experience advising on Canadian tax issues affecting multinationals with operations in Canada, including inbound structuring, cross-border employee mobility, withholding tax, and tax treaty issues, and on matters relating to executive compensation. Stephanie has industry specific experience in sectors including technology, media and telecommunications, energy, mining and infrastructure, and consumer goods and retail.
Ivan Tsios is a director of economics in the Chicago office. He focuses on valuation, transfer pricing, and financial/statistical analysis. He has assisted multinational corporations with business enterprise and intangible asset valuations and a broad range of transfer pricing issues, including planning intercompany pricing, documenting tangible, intangible, and services transactions, negotiating advanced pricing agreements, restructuring intercompany arrangements for tax purposes, intellectual property transfers, and audit/controversy support.