Transfer pricing tax valuation

When it comes to transactions to which traditional transfer pricing methods may not be effectively applied (e.g. transfers of equity, transactions related to hard -to-value intangibles etc.), taxpayers may need to seek help from valuation methods, such as Cost Approach, Income Approach and Market Approach, to obtain a technically defensible position on transfer prices.

On the other hand, Chinese tax authorities are paying more attention to the taxpayer’s transfer pricing position in these transactions, in which valuation and pricing is known to be difficult, and are keen to defend the legitimate tax base through innovative methods.

PwC is a market leader in providing these valuation advisory services for tax purposes to our numerous clients. We are dedicated to helping our clients successfully design and implement their transactions with our valuation capability.

How we have helped?

• Assisted a US-based food equipment supplier through a combination of transfer pricing economic analysis and valuation analysis using discounted cash flow (DCF) method, and with its subsequent negotiation with in-charge tax authorities, to mitigate the current equity tax exposure and the future transfer pricing risk.
• Assisted an auto parts manufacturer to refine its royalty payment via valuation analysis on intangibles assets, and subsequent support discussion with in-charge tax authorities.