Marcum 2021 Year-End Tax Guide

opportunities. Now is a time for large MNEs, as well as small and mid-sized MNEs, to take a fresh look at their transfer pricing policies, not only to defend their current transfer pricing position caused by the pandemic, but also to identify new opportunities to further maximize deductibility and reduce global effective tax rates. Marcum offers a full range of assurance, tax, and advisory services to clients operating businesses abroad as well as those headquartered abroad who seek financing in the U.S. markets. From international business structuring to complex tax and transfer pricing matters, our professionals bring the Marcum standard of best-in-class service and a depth of knowledge to the international arena. Marcum’s International Tax Services Group provides a broad range of international tax services to both domestic and foreign clients that have global operations. Our international tax team has extensive experience in tax planning, cross border transactions and international tax compliance. Likewise, Marcum’s International Tax Services Group has the technical knowledge and experience to assist in transfer pricing support for clients, including planning, preparation of documentation to confirm with IRS and OECD requirements, and assistance in defending tax return positions in the event of a tax audit.

» Review transfer pricing in line with the guidance released by the OECD on the tax treatment of certain items such as operating losses and incentives. » Review transfer pricing in line with proposed changes announced by the Biden Administration to minimize global effective tax rates.

• For Controversy Updates » For Altera

» Continue to review cost-sharing arrangements for inclusion of stock-based compensation in the intangible development costs paid by each participant.

• For Coca-Cola

» Review intercompany agreements to ensure they align with current functions, risks, and assets assumed by the parties to the transactions. » Review transfer pricing policies that rely on previous agreements with the IRS (of all forms) for continued applicability. While all of these recent changes in the tax environment introduce new complexity to transfer pricing, they also create international tax and transfer pricing planning

MARCUM RECOMMENDATION The TCJA changes related to the corporate tax rate and the imposition of FDII rules, GILTI and the BEAT require rethinking the approach to transfer pricing and intangibles ownership. Further proposed changes by the Biden Administration and Congress should also be considered. A thorough modeling of these changes needs to be performed by MNE taxpayers to determine their impact. Since this analysis is facts and circumstances-driven, there is no simple way to estimate the results or strategies that should be explored. Further, the impact of the COVID-19 pandemic and the CARES Act stimulus should also be carefully considered to defend the transfer pricing positions taken and maximize tax benefits. Marcum recommends that MNE taxpayers undertake a study to determine the impact of the TCJA and proposed changes by the Biden Administration on international structuring, transfer pricing policies and global tax rates, and to defend current transfer pricing positions due to the pandemic. The outcome of such a study will point out new strategies that should be explored to minimize global taxation for a MNE.

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