Domestic Transfer Pricing: Often-Missed Triggers

Why domestic TP is easy to overlook

Transfer pricing is often associated primarily with cross-border transactions, but specified domestic transactions between related parties above the prescribed threshold also fall within transfer pricing documentation and reporting requirements — a category businesses sometimes miss entirely, assuming TP is purely an international-tax concern.

Transactions that commonly trigger domestic TP obligations

• Transactions with entities where common directors or significant common shareholding exist, even without any group-holding-company relationship
• Transactions between a company and its directors, or entities in which directors have a substantial interest
• Transactions between entities eligible for specific tax deductions or exemptions and their related parties, where profit-shifting between them is specifically scrutinised
• Certain arrangements between a company and its close relatives' businesses

Why this catches businesses off guard

A business may correctly conclude it has no international-tax exposure requiring Form 3CEB, and stop the analysis there — without separately checking whether any of its domestic transactions meet the related-party and threshold criteria that independently trigger domestic TP compliance.

What to do about it

• Map out all entities and individuals that could meet the "related party" definition — not just obvious group companies, but common-directorship and significant-shareholding relationships too
• Review transaction volumes with each against the applicable threshold
• Where domestic TP applies, the same benchmarking and documentation discipline used for international transactions applies here as well

A practical starting point

As part of your annual tax compliance review, explicitly ask whether any domestic related-party transactions exist and meet the threshold — don't rely on the international-transaction analysis alone to capture this separate, easily-missed obligation.

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