Transfer pricing analysis is billed at an hourly rate against a retainer established at the outset, with a written fee schedule and a cost estimate before work begins. The scope of the engagement, and so its cost, depends on the factors below.
How transfer pricing is billed
Transfer pricing analysis is billed at an hourly rate for records review, the functional analysis, comparables research, modeling, report preparation, and testimony. A retainer is established at the outset and applied against time incurred. The current rate schedule and retainer terms are provided on request and confirmed in a written engagement agreement.
What sets the scope
Transfer pricing engagements are scoped to the controlled transactions and years at issue, the forum, and how much of the record must be rebuilt. A review of one intercompany arrangement over a defined period, with the group's documentation and segmented financial statements in hand, is the narrowest scope; several transaction types, intangibles whose ownership or value is contested, a comparables search built from the ground up, or parallel tax and commercial proceedings widen it. We provide a written fee schedule and a cost estimate before work begins.
What drives cost
Number and type of controlled transactions at issue: sales of goods, services, licenses of intangibles, and intercompany loans or guarantees
Number of years and legal entities in the analysis, and whether segmented financial statements exist or must be built from the general ledger
Whether the group's contemporaneous documentation can serve as a starting point or the delineation and functional analysis must be rebuilt from the agreements, the ledger, and interviews
Scope of the comparables work: a search of financial data on independent companies, a review of license agreements between unrelated parties, or both
The forum and its schedule: an examination or appeal, a Tax Court petition or refund suit, a state tax appeal, or a commercial, shareholder, or divorce case
Deposition and trial testimony, including preparation and travel time