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Benchmark Transfer Pricing

It is very important for your foreign subsidiary to be remunerated by other group companies on an arm’s length basis. A company needs to prove not just that the agreement is robust, but that the pricing is consistent to that at which third parties buy and sell. There is high level of regulatory focus in this area and companies need to be cautious in dealing with Transfer Pricing issues. Nair & Co. assists by both drafting the intercompany agreements as well as benchmarking to ensure your transfer pricing policy is robust and up to date.

Cost Plus

Cost Plus agreements generally apply to a foreign startup, or to a cost centre. This may be Research and Development (R&D), sales and/or customer support where sales revenues are not booked in the local entity. In this type of agreement, the foreign subsidiary is guaranteed a profit regardless of the profit position of its parent.

  • The Cost Plus agreement must be drafted to be robust from both a legal and tax viewpoint. For example, it must define all costs that come within the Cost Plus formula. A company’s sales and customer support processes need to be covered in detail. For these reasons, it is imperative that the Cost Plus agreement is always customized to a company’s specific situation.
  • Taking a prior existing agreement from your last company and “cutting and pasting” it for your current company is fraught with risk. Nair & Co.’s specialists ensure that the agreement a company creates is robust and well supported and, if need arises, can offset even the most stringent tax investigation.
  • Award-winning Nair & Co. offers an integrated one point of contact solution to better protect you and your company. By using us, you can rest assured that finance and administration support to your foreign operations is provided efficiently and you operate safely abroad. We are an independent self-sustaining service provider with no links to, or investments in us, by sensitive third-parties such as your bank!
Commissionaire Agreement

A Commissionaire Agreement is a special type of cost plus agreement. In a cost plus agreement, you cover your foreign costs and guarantee the foreign entity a profit, which is a percentage of your foreign costs. In a Commissionaire Agreement, you cover your foreign costs and guarantee the foreign entity a percentage of sales generated from “hot leads” it has introduced to you. You treat the foreign entity as a “sales agent.”

  • Cost plus and Commissionaire Agreements are interchangeable when it comes to foreign sales operations. Nair & Co. advises companies on which options best suit their circumstances and subsequently implements them.
  • Award-winning Nair & Co., offers you an integrated solution that provides top-level protection abroad. We view our clients as our business partners. Our clients’ initiatives, pain points and challenges become our own. We work together to find a solution that is best for your company.
  • When looking for a customized solution, Nair & Co. is a leader in the marketplace. With a majority of our new business coming from referrals, word-of-mouth is the most powerful medium for us. We couldn’t achieve this success without satisfied clients. We don’t look to meet your expectations; we exceed them.
Buy Sell

A Buy-Sell agreement applies when a foreign subsidiary is the profit center. This agreement sets the price at which the foreign subsidiary buys from its parent to sell to its customers. A full fledged Buy-Sell agreement is complex and time consuming to produce. When you do this, the benchmarking is automatically included.

  • In some scenarios, a “stripped down” Buy-Sell agreement may suit your circumstances. In this model, the foreign subsidiary contracts with the customers on behalf of its parent and also acts as a collection agent for the parent. In return, the parent allows it to retain a percentage of the revenue it collects.
  • Nair & Co. has dedicated specialists to assist clients in creating a transfer pricing strategy that is technically robust, is based on sound economic theory, is practical to implement, and is adaptable to the client’s developing business. Our team facilitates clients in establishing and defending the transfer prices with methods that meet the arm’s length standard, while ensuring the documentation and audit trail remain consistent with the compliance standards in the country or countries of operation.
  • Award-winning Nair & Co. offers an integrated one point of contact solution to better protect you and your company. By using us, you can rest assured that finance and administration support to your foreign operations is provided efficiently and you operate safely abroad. We are an independent self-sustaining service provider with no links to, or investments in us, by sensitive third-parties such as your bank!
Benchmarking of Intercompany Agreements

The aim of this exercise is to show that the pricing embedded in the Intercompany Agreement gives the foreign subsidiary a profit margin that is consistent with those of local, third-party providers of the same service or product.

  • Nair & Co. has a proven benchmarking process. We subscribe to a variety of corporate databases and search from the 1000+ companies offering services, purportedly similar, to those of a client. We sift the results to form a more focused subset of 15-20 companies offering the same or very similar services.
  • Our specialists find and analyze their financials to obtain their profit margins and subsequently determine the profit margin appropriate to your foreign entity. The Intercompany Pricing is then set to give this profit margin.
  • Award-winning Nair & Co. offers an integrated one point of contact solution to better protect you and your company. By using us, you can rest assured that finance and administration support to your foreign operations is provided efficiently and you operate safely abroad. We are an independent self-sustaining service provider with no links to, or investments in us, by sensitive third-parties such as your bank!

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