On 12 December the ECCT's Tax committee hosted a lunch on the topic "Are you ready for a Transfer Pricing Audit?" with speakers Lorene Chen, Tax Director, KPMG Taiwan and Rebecca Lee, Tax Associate Director, KPMG Taiwan. The guest speakers gave an overview of the transfer pricing (TP) auditing process based on their first-hand experience of actual cases.

Transfer pricing (TP) refers to the prices paid or received in transactions between related parties, including those involving tangible goods, intangible assets, services and funds. It is one of the most complex tax issues facing global companies nowadays given more and more tax judisdictions and instances of firms using transfer pricing as an easy way of improperly shifting profits around.
Taiwan introduced Transfer pricing (TP) regulations in 2005 and the tax authorities have been conducting TP audits for almost eight years. In tandem with the substantial tax revenue generated from audits and rapidly-accumulated experience, the number of cases selected for audits and the intensity of reviews continues to increase. It is therefore in every company's interest, regardless of industry, size or profitability to prepare for the possibility of an audit.While the process and timeline of each TP audit case is different, they tend to follow five stages. In the final fifth stage, the tax authority will submit an assessment report to the Ministry of Finance (MoF). The MoF has to approve each report and recommended action. The whole process could take up to or even longer than two years.