INTERCOMPANY REPORTING

Many companies have significantly expanded their global footprints, building multinational value chains that generate an enormous volume of intercompany transactions. Operating in multiple countries introduces the need for compliance with country-specific regulations and tax policies. There is a growing level of regulatory scrutiny, and regulators are increasingly focusing their attention on the cross-border transactions of multinationals.

Intercompany transactions arises when the unit of a legal entity has a transaction with another unit within the same entity. Many international companies take advantage of intercompany transfer pricing and other related party transactions to influence cash-flow, promote improved intercompany transaction taxes, and effectively enhance efficiency within the company. Intercompany transactions can be essential to maximizing the allocation of income and deductions. Here are a few examples of intercompany transactions:

• Two departments
• Two subsidiaries
• Parent company and subsidiary
• Two divisions