Expertise

Establishment of Global TP Policy

Establishing a global TP policy is an essential aspect of tax risk management for MNEs. Once established and implemented, our clients can get on with the important task of focusing on their businesses, without worrying about TP risks.

We have extensive experience in this area, having established policies, completed the TP documentation, and provided supporting services for many high-profile clients, both inside and outside Korea, with a view to our clients’ mid- to long-term business strategies.


TP Services related to Business Restructuring

MNEs frequently restructure their business operations – for example, by establishing a new company, by transferring business between companies, or by changing their transaction structures. In the course of restructuring, many TP issues arise, and it is necessary for TP professionals to review the new functions, perform a TP risk analysis of the various parties involved, determine arm’s length pricing for any asset transfer, and broadly re-examine the group’s TP policy in the light of the restructuring.

After the restructuring, if there is a decreased tax burden in any of the countries involved, there is a high possibility that this will invite scrutiny from the local tax authorities. It is therefore essential to review the TP policy and documentation to ensure that the business is well-prepared for any challenges that might arise.

We support our clients and inform their decision making before, during, and after a restructuring, to ensure they are fully prepared and TP risks are mitigated as far as possible.


TP Documentation

With the introduction of the OECD BEPS Action 13, taxpayers who meet the Korean local TP documentation requirements are required to prepare the BEPS reports (Master File, Local File, and Country by Country Report). Even taxpayers who do not meet these requirements should still prepare and maintain TP documentation to prove the arm’s length nature of their intercompany transactions (not least because it might later exempt them from an under-reporting penalty).

We have unparalleled experience in preparing BEPS reports and contemporaneous TP documentation for high profile, global clients, and can deliver these services in a cost and time effective manner.


TP Risk Diagnosis, Tax Audit Defense & Tax Appeal Services

The introduction of the BEPS reporting regulations has led to tax authorities around the world being able to collect and analyze data on intercompany transactions more easily than ever before. Consequently, contentious transfer pricing decisions are rapidly rising around the world.

With this backdrop, we enable our clients to identify and diagnose potential TP risks in advance. In the event that an adverse decision is made by a tax authority, we advise our clients on an appropriate tax defense strategy, through mock TP audits and representation in actual tax audits and appeals.


Advance Pricing Arrangement (APA) and Mutual Agreement Procedure (MAP)

An APA enables MNEs to avoid or mitigate TP and double-taxation risks, by agreeing in advance, with the tax authorities of two jurisdictions, arm’s length prices for their intercompany transactions. It is also possible for companies to agree retrospective APAs in order to eliminate risks relating to past transactions.

MAP is a procedure through which tax authorities in two jurisdictions negotiate with each other so as to resolve double taxation, in accordance with the applicable tax treaty.

We have successfully helped numerous clients to achieve a swift and favorable outcome in an APA or MAP.


Market Price Evaluation for Domestic Intercompany Transactions

Members of major domestic corporate groups frequently transact with another, for example through royalties, loans, or financial guarantee services. These intercompany transactions, and specifically the applicable transaction price, give rise to numerous tax and legal risks.

Specifically, from a corporate income tax perspective, risks arise under the "Repudiation of Wrongful Calculation" regime. From a legal standpoint, the transaction prices must also adhere to standards set under local anti-trust and fair competition laws – standards which refer to the Korean TP regime.

We can review and analyze intercompany transactions between domestic related parties, in order to resolve TP issues, and other related matters raised by the NTS and Fair Trade Commission.