Page 119 - Confluence - Souvenir 2023 - Flip Book

Focus Group Tax & Compliance :

Transfer Pricing Documentation and Planning Tool
In 2024, UAE businesses must prioritize keeping head office expenses in check 02 June 2023
nd
Businesses that have a diverse footprint across sectors are typically structured as group companies
constituting a holding company with various subsidiaries affiliated to it. Group company head offices While UAE corporate Tax became FZE, who took the members through fruitful with active discussion on
are epicentres of economic power & centralised control and are integral in running the show effective from 01.06.2023, Team Focus the very basics of what is Transfer practical scenarios raised by members
seamlessly for diverse entities within the group. Intrinsically, group companies have an added Group Tax & Compliance does not Pricing and some of the methods to of the focus session to the panelist CA
advantage to access finance however sometimes there is a price to pay - especially in the realm of sleep. This is keeping with the spirit be adopted based on the business or Sameer Kashikar- Manager Accounts
evaluating collective head office expenses. of the ICAI Motto, a session plan was industry to which it best suits for its Payables & Taxation- UAE & GCC Tax

Unravelling the ‘elephant in the room’ underway for its focus members, to application. She also provided some Expert Jashanmal National Co. and CA
be held well in time after the effective key insights into the practical outlook of Purvi Mehta International Tax Specialist
Group companies typically apportion head office expenses like C-suite incentives, travel costs, date of the implementation of the law. a tax auditor based on her experience with Emirates Chartered Accountants
learning & development programs, marketing expenses and strategy/ ERP programs to their The session was held on the 02 June with other jurisdiction and shared some Group along with CA Lakshmy Seshadri.
subsidiary companies. With CEOs/ CFOs/ COOs & CMOs of subsidiary companies functioning from 2023 at Villa Rotana Ballroom, Sheikh takeaways for businesses to ponder The discussion was moderated by
the group company head office it leads to head office incurred expenses being recovered through Zayed Road on the much talked about upon and action on time to ensure co-ordinators CA Malavika Kolera &
subsidiary companies. This broad apportioning of head office expenses results in operational costs of topic of Transfer Pricing around its compliance. She also briefly touched CA Aashna Mulgaonkar. The session
subsidiary companies increasing which reduces margins. documentation and planning tools. upon the importance of documentation was concluded with the presentation
Effective Head Office (HO) expenses allocation helps assess the true performance and profitability of The lead speaker for the session was in this entire exercise and the need of mementos to our speakers and
individual branches within an organization. C-suite salaries, business travel costs, training programs, CA Lakshmy Seshadri- Manager Taxes to have expert advise before it is too panelist with a formal vote of thanks.
strategy & Enterprise Resource Planning (ERP) are common examples that necessitate careful & Financial Compliance with BASF late. The panel discussion was made
allocation to reflect the true cost of operations.
Potential roadblocks in effective management of head office expense allocation:

Excessive or Unnecessary Spending: The C-Suite focuses on ensuring that the company's budget
aligns with its overall objectives. However, the fact that expenses are within budgets, could distract
attention away from matters dealing with overspending on certain areas that could be reduced.

Lack of cost benefit analysis: When Group companies undertake exorbitant marketing initiatives, it is
recommended to conduct cost benefit analysis to measure the benefits of a decision against the
costs incurred.

The final word on the ‘elephant in the room’ & other factors impacting finances

It is necessary the Board of Directors also analyse the expenses incurred in the current financial year
before allocating higher budgets for 2024. With board meetings lined up, as the year ends, now is
the best time to get a grip on the financial outflow of the current year and take informed decisions
while allocating spends for the next year.

Article authored by James Mathew – CEO & Managing Partner, UHY James

This article was initially published on Gulf News

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