Transfer pricing regulations between the United States and Canada

Published: October 15, 2015 at 13:18 by Harrison Law

In general “transfer pricing” can be defined as the internal pricing of goods or services when a company transfers goods or services internally across national borders. Usually this relates to a multinational company that has subsidiaries in several countries, and when these subsidiaries transfer goods, services, software, intellectual property etc. between each other. The general rule is that such pricing should be set at “arms-length”, i.e. the pricing should be the same or similar to what the subsidiary would have charged an unrelated independent third party. The purpose of these regulations is to prevent aggressive or manipulative tax planning by multinational companies, where the company might want to overprice some goods and services internally, and thus transfer profits to the country with lower corporate taxation.

Transfer pricing rules and regulations are very complex and country specific. These rules can also apply to situations that one might not realize immediately. For example in some cases if two seemingly independent companies or entities in two different countries share family members as board members, these two companies can be considered related, and thus all transactions between them fall under transfer pricing regulations.

Renate Harrison of Harrison Law, P.C. can help you, your family, or your company to navigate the transfer pricing regulations between the United States and Canada. Please do not hesitate to contact us at harrison@harrison.pro to discuss your specific situation in further detail.