1. Transfer Pricing Defined A price negotiated between two related persons A price that is affected by that relationship A price that is different from the price derived from two unrelated parties trading at Arms Length

2. Why is Transfer Pricing important? Substantial Growth in trade between Multinational Enterprises (MNE) globally Different Tax rates and rules between States Tax is a cost of the Total MNE MNE’s concern is overall Profitability in a worldwide basis

3. Current Provisions in T&T Laws Section 10(1)b of the ITA places a limitation of 1% on Management Charges Section 67 gives the IRD the power to disregard any artificial or fictitious transactions In 2006 Section 10(1)b increases the limitation to 2% and defines what is Management Charges.

4. OECD Models Standard is the “Arm’s Length Principle” Related Parties referred as Associated Enterprises Comparability Concept Pricing Methods

5. Current Trends Legislation to deal with Transfer Pricing Legislation to report Transfer Pricing Transactions Charging Penalties for non-disclosure Training of Staff Changing Procedures to act on information received

6. Advanced Pricing Agreements Defined as an Agreement that determines the Price in Advance Advantages to Tax Administration and MNEs Disadvantages to Tax Administration and MNEs

7. Thin Capitalisation Thin Capitalisation occurs where companies are financed mainly by Debt Legislation to limit rate and debt to equity ratio

8. Conclusion re Transfer Pricing Recognition of the need to deal with Transfer Pricing Issues Legislate to deal with the issues Allocate Adequate Staff Source Expert assistance Be Cautious Everyone believes the bigger piece of the Pie belongs to them

9. Conclusion Other Introduce a Tax that may be easier to administer Ensure that persons contributing to the MNEs profitability is well compensated. Encourage government to introduce measures to cause investments in the country and people