Transfer Pricing Absolutely Critical for Canadian Multinationals: Ernst & Young



    Increased focus on audits by tax authorities continues to make transfer
    pricing the number one issue for Canadian Tax Directors

    TORONTO, Dec. 18 /CNW/ - Nearly ten years following the imposition of a
new transfer pricing regime in Canada, a biennial Global Survey by Ernst &
Young demonstrates that 96% of Canadian multinational enterprises (MNEs)
surveyed consider transfer pricing to be "absolutely critical".
    Transfer pricing relates to the pricing of goods, services or intangibles
between related parties when they conduct transactions across international
borders. This issue is critical to tax authorities around the world as it has
a massive impact on the tax base of any particular domestic regime. It is also
critical to MNEs as it impacts their global effective tax rate, financial
statement reporting and compliance costs.
    "Our survey shows that the increasing pace of integration of the global
economy, combined with the increasingly complex regulatory environment has
resulted in transfer pricing becoming the preeminent issue for tax directors
in Canada and around the world," explained Greg Noble, Ernst & Young's
Canadian Transfer Pricing Leader.
    The Ernst & Young Global Transfer Pricing Survey was last published in
2005. The 2007 edition released today showed an interesting trend which was
not present in the prior survey. Today, over 87% of MNEs' consider that
transfer pricing will be a critical issue in relation to managing their
financial statement risk.
    What's more, the MNEs should budget for increased costs around transfer
pricing compliance. Over half of the global survey respondents (53%) said
their transfer pricing compliance costs have increased. In 2005, only 29% of
parent companies surveyed mentioned a rise in costs as a result of financial
reporting and regulatory developments. Noble clarified, "The reality is that
our clients need to address the transfer pricing rules not only from the
perspective of compliance, but also with respect to how these cross border
issues will impact their financial statements and ultimately their share
price."
    Noble said, "We expect transfer pricing to continue to be a hot issue for
the foreseeable future. The world is only becoming more integrated and global
commerce is becoming increasingly dominated by MNEs. As such, tax authorities
around the world will continue to add resources to ensure that they get their
fair share of the global tax pie."

    About the survey

    Consensus Research International, London, was commissioned by Ernst &
Young to carry out the 2007 Global Transfer Pricing Survey. The survey is a
comprehensive investigation of transfer pricing practice and strategy among
850 MNEs across 24 countries. In effect, there are two surveys, one of parent
companies interviewed from the MNE headquarters perspective, and one of
inbound subsidiaries, interviewed from the local operating company
perspective.

    About Ernst & Young

    Ernst & Young, a global leader in professional services, is committed to
restoring the public's trust in professional services firms and in the quality
of financial reporting. Its 130,000 people in 140 countries pursue the highest
levels of integrity, quality and professionalism in providing a range of
sophisticated services centred on our core competencies of auditing,
accounting, tax and transactions. Further information about Ernst & Young and
its approach to a variety of business issues can be found at
ey.com/ca/perspectives. Ernst & Young refers to the global organization of
member firms of Ernst & Young Global Limited, each of which is a separate
legal entity. Ernst & Young Global Limited does not provide services to
clients.





For further information:

For further information: on this survey or to schedule an interview,
please contact: Amanda Olliver, amanda.olliver@ca.ey.com, (514) 874-4308;
Megan Bailey, megan.bailey@ca.ey.com, (403) 206-5037; Kelly Peace,
kelly.peace@ca.ey.com, (416) 943-3662


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890