USA Transfer Pricing Policy

Email: sfo4ww@evershinecpa.com
or
Please contact The Engaging Manager Ian Lin, a well-English speaker
Tel: +1-510-996-2685

TP-Q-10
Why kinds of scenarios will be adopted TP policy? What is the relevance between DTA and TP policy?

TP-A-10
When the United States Tax entity would like to pay out whatever business profits, Royalty, Technical Services fees, Interests, trading amount etc., it will adopt DTA tax rate. Its judge criteria, please see the United States Treaty Page.
But if want to verify the above-mentioned amount if reasonable, will adopt the United States TP Policy.

TP-Q-20:
在美國甚麼情況下, WFOE 外商投資企業不需要同時處理TP 申報和文件申報?
What are the scenarios in the United States, that a Wholly Foreign-Owned Entity (WFOE) is exempted from compliance of Transfer Pricing (TP) declaration and TP documentation?

TP-A-20:
You are not required to File Form 8975 (CbC Report) if the annual revenue of your group for the immediately preceding reporting period was less than S$850 million.
However, IRS Form 5471 (Ultimate parent entity in the US) and 5472 (Constituent entity in the US) are required to prepare by all taxpayers and file together with the corporate tax return.

TP-Q-30:
在美國甚麼情況下, WFOE 外商投資企業需要向該國的稅務局發送TP 申報? 甚麼是申報單名稱?
What are the scenarios in the United States, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration to the country’s tax bureau? What is the name of the TP declaration form?

TP-A-30:
A WFOE in the US is required to prepare IRS Form 5472 as part of TP declaration and submit it together with corporate tax return.

TP-Q-40:
在美國甚麼情況下, WFOE 外商投資企業需要向該國稅務局發送TP 申請和文件? 甚麼 declaration 表單名和文檔名?
What are the scenarios in the United States, that a Wholly Foreign-Owned Entity (WFOE) is required to submit TP declaration and TP documentation to the country’s tax bureau? What are the name of the TP declaration form and TP documentation forms?

TP-A-40:
A WFOE in the US is required to prepare IRS Form 5472 as part of TP declaration and submit it together with the corporate tax return.
Local and Master File is not mandatory to submit unless requested by IRS.
CbC Reporting (Form 8975 and Schedule A) are required to prepare by an Ultimate Parent Entity in the US when the consolidated UPC’s revenue > US$ 850 million in the preceding fiscal year.

United States TRANSFER PRICING for professionals

Overview

The United States is a member of OECD.
The TP principle is cited in the US transfer pricing rules (Code Section 482 and the Treasury regulations thereafter), TP Guidelines, and the UN Transfer Pricing Manual for Developing Countries.
IRS has authority under Section 482 to reallocate income or expenses if it found that the transaction had not been conducted at arm’s length.

Related Party

Controlled taxpayer means any one or two or more organizations, trades or businesses are owned or controlled directly or indirectly by the same interest.
In general, “control” does not need to take any special form. For instance, there is no requirement for a certain percentage of the voting power or value in an entity to establish control.

The test is based on the facts and circumstances, with such factors as family or business relationships often considered. Control could be direct or indirect, including control resulting from the actions of two or more taxpayers acting in concert or with a common goal or purpose.

Transfer Pricing method

All transfer pricing methods outlined in the OECD guidelines may be accepted.

Below is the acceptable TP method. The taxpayer shall choose the best method for the analysis of the related party transaction.

1. Comparable Uncontrolled Price (CUP)
2. Resale price (RPM)
3. Cost-plus (CPM)
4. Comparable Profit Method (CPM)
5. Profit-Sharing Method

Due dates and respective threshold:

Please be aware below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

San Francisco Evershine BPO Service Limited Corp.
E-mail: sfo4ww@evershinecpa.com

The Engaging Manager Ian Lin, a well-English speaker
Tel: +1-510-996-2685

or
For how to exchange data files between your Finance Accounting System and Evershine  Cloud Accounting Information System,
please send an email to HQ4sfo@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
LinkedIn address: Dale Chen

Additional Information

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