Anyone here in this field or know of anyone in it? Seems a lot of transfer pricing consultants undertake the CFA. I think its heavily overlooked as being a tax discipline, whereas its more as a means to a tax end. Most of the skills used are economics related, ie financial statments analysis, valuation of intangibles and businesses etc, research into markets and economic conditions, comparables etc etc. So just wondering if anyone out there is in the field and undertaking the CFA and how they are finding it. Or just if anyone wants to discuss transfer pricing?? probably not,
I work at a bank so Transfer pricing from what I know is a tresury (middle office) function. none of the skills you mention are required. we must be talking about different things. but yes, most have their CFAs or are working towards that.
Are you referring to Funds Transfer Pricing (FTP)?
Ok, we are on different wavelengths. Im talking about transfer pricing consulting as in for all intercompany transactions. Ex 1, manufacture in thailand produces microchip and sells it to related party in USA. Need to price microchips Ex 2, Company decides to sell its intellectual property (such as trademarks and knowledge etc) from USA to related company in holland. Need to value IP Ex 3, companyin US loans $10,000,000 to subsidiary in Australia. Need to price loan rate, terms etc. Just a few examples the list goes on.
Your example 3 is Funds Transfer Pricing. In any case, i can’t imagine why you would really need all those crazy skills you mentioned.
frankarabia, Your response speaks of an air of arrogance with a healthy dose of cluelessness. TP is something that is on the minds of all multinational CEO and CFOS. Please see this link from PWC to read a little more about it: http://www.pwc.com/gx/en/tax/transfer-pricing/transfer-pricing.jhtml Just as an idea for something like ex1 whats done: 1) Databases are searched using specific criteria to find comparable companies that are producing a similar microchip. Those comparable companies are futher checked to ensure independence and comparability as best possible (will put together a risk and functional profile of the entiies/transaction as well). Then their profit margins are checked in comparison to the tested party. Adjustments are made for certain items if need be, such as heavy interest payments or currentcy fluctation differences in cost structures, or differences in reporting of the comparables, or economic conditions, markets etc. If tested company is within range of comparables, beautiful then all is well with the world and the transactions are at arms length and the tax authorities of both countries (ie where the product is being sold from and where it is being sold to) should be happy. If not, may need to make adjustments to financials etc to reflect an arms length trnsaction ex 2: 2) Will generally do a DCF or something like that to determine value of IP. ALso may use a comparable IP or something transaction to support this. all sorts of methods may need to be employed etc etc to support a fair transfer value.
A career in TP ends up either in a senior consulting position or a tax manager in a multinational. CFA is looked upon favorably on the consulting side. But all in all, the career potential in this field is capped; I would not do this for the rest of my life.
Oh well too late. I couldnt find anything better. I quite enjoy it nonetheless which I guess is what mostly matters.
i know about funds transfer pricing at a financial institution. that’s it. definitely clueless when it comes to other sectors. they’re making it a lot more interesting than it sounds to me though. i’ll be arrogant today. great…now what?
actually frank, i tink I went a little harsh on you. I read your post differently, as if you were saying only funds TP exists, the other is a load of crap. So my apologies. I tend to get all defensive of TP i think because most people have no idea what it is, and think it is actually tax. All be it, it is ultimately for tax purposes in the end, there isnt much other tax work like filing in tax returns or anything like that
so i showed I just showed a funds pricing analyst what you said, he adds, “FTP has as much to do with the effective allocation of capital and assessment of economic profit. the taxes is just one consideration of efficiency” we work at a bnak though so this might not be the same in the petroleum or manufacturing sector. there you have it.
Well its the same I guess… With debt pricing, basically we have to set appropriate rates that should be charged for intercompany loans. This is done by finding the companies credit ratings, loan amount, length, other covenants etc, and then coming up with a fair rate. The other end of it is planning for debt. So we will work on coming up with tax efficient financing structures intercompany wise. Maybe some sort of a cash pooling system or something etc etc…
Transfer pricing is one of the few growth areas right now for mere humans with the CFA skill set (the super-humans get to work at hedge funds and Fidelity). While people in other finance/accounting related areas have been getting laid off in droves, the TP arms of the Big 4 have been hiring like crazy (at least in the Amtrak corridor).
I met a guy in transfer pricing, he worked for one of the big accounting firms. He was a loser and was so arrogant for some reason. He had his hair gelled over from one side, probably hairsprayed it with some old school brand like alberto or something like that. He just bugged me. He wore Khakis and tassled loafers, and he was like 23. What a nerdy loser.
Yes storko, would bug me too. But arent a high proportion of finance guys geeks like that? But unfortunately will never make massive dollars. If partner can make good good money, but not rainmaker style
I would consider him more accounting than anything else.
yes, true it can be considered very accounting, particularly since its generally for big 4. Anyway, good on him for bringing tassled loafers back
nequity, you sound like an arrogant bastard with a healthy dose of stupidity. you will never make rainmaker money or come close to hitting it up with hillary scott.