As a new decade approaches, Aaron Leslie and Liz Tookey of TP International, The Global Recruitment Specialists discuss what can be expected from world markets and the demand for transfer pricing specialists.

With the worst of the recessionary environment behind us, TP International is beginning to see an increase in approaches from clients looking for experienced transfer pricing professionals in a number of key markets, Asia and Europe in particular. It will not be plain sailing though, as cost pressures mean that significant relocation packages will still be hard to come by and a preference for locally trained and experienced resources will continue.

Certain countries are now entering a secondary phase in the evolution of transfer pricing enforcement. Documentation rules that have now been in place for a couple of years are starting to be audited by the tax authorities, bringing with it the demand for transfer pricing professionals with experience in developing defence strategies, negotiating with tax authorities and having the commercial skills to adequately deal with difficult questions and deliver robust solutions for clients.

Similarly, multinational corporations that are the subject of tax authority enquires into their transfer pricing practices are beginning to see the value of bringing transfer pricing expertise in-house. The need for commercially focused professionals in this sector will continue to rise in line with the desire to reduce external consultancy costs.

LITIGATION AND THE RISE OF THE LAW FIRMS

In more mature transfer pricing markets, the appetite for tax authorities to litigate transfer pricing cases is increasing. This would appear to be based on the relative success that the tax authorities are having from litigation, however to think that there will be an avalanche of transfer pricing litigation over the next year or so, is slightly ambitious.

Tax authorities still have limited resources, impacting on the number of cases they are in a position to address over the course of a year. Further, while there has been some success to date, picking the right cases to fight with the highest chance of success will always remain a priority. As international recruitment specialists, TP International has been approached by a significant number of international law firms expressing a desire to build up a transfer pricing practice.

Due to the overwhelming dominance of the big four accounting firms in this space, this could end up being a costly and a high risk exercise, however structured in the right way and with the right leadership there is definitely scope for law firms to be incredibly successful.

The key to success in starting something from scratch in a mature market dominated by a few, but very strong, competitors is ensuring that the additional service offering easily fits with, and can leverage off, existing service offerings. Recruiting the right people to drive the practice forward quickly and achieving scale to promote profitability is also essential.

IN-HOUSE AND CONTRACTING

As noted at the beginning of this article, multinational corporations are starting to increase the levels of in-house transfer pricing expertise both with permanent headcount increases and with interim/contracting positions. This is expected to be a common theme in 2010 as pressures on paying consulting fees increase, coupled with the red tape difficulties of securing sign off for permanent contracts.