KPMG report: Taxpayer-initiated transfer pricing adjustments in MAP
Overview of the MAP under a relevant income tax treaty as it relates to taxpayer-initiated adjustments
The phrase “transfer pricing adjustment” typically calls to mind a hard-fought audit spanning years, cash tax to be paid or net operating losses that will evaporate, possible penalties, and all the back-end complexity that comes with implementing the adjustment once it has been determined.
Yet adjustments can also be made proactively by taxpayers, and without most of the trappings of an IRS-initiated adjustment. In the United States, taxpayers are permitted to use their timely, original U.S. returns to adjust the transfer prices on their books, if necessary to achieve an arm’s-length result—a concession that can ease operational transfer pricing pressures and help taxpayers avoid penalties.
Read a June 2024 report* prepared by KPMG LLP tax professionals that provides an overview of the mutual agreement procedure (MAP) under a relevant income tax treaty as it relates to taxpayer-initiated adjustments, as well as some collateral consequences that taxpayers need to consider.
* This article originally appeared in The Tax Adviser and is provided with permission.