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Shiv Mahalingham, a managing director in Duff & Phelps European transfer pricing practice, answers a query in Tax Journal's "Ask an expert" on if it is possible to design a robust transfer pricing structure that is compliant with regulations yet still efficient from a tax arbitrage perspective:
While there are important commercial factors to bring to the surface, the answer is 'yes' - as long as there are different effective tax rates in the jurisdictions in which companies operate, and as long as economic substance supporting the transfer pricing structure is in place. This requires a proactive planning approach, in contrast to a reactive documentation led approach to transfer pricing policy.
