The complex web of intercompany transactions within a multinational enterprise is governed by the principles of transfer pricing, ensuring that goods, services, and intangibles are valued at arm's length. While this is primarily a tax and regulatory consideration, these transactions are fundamentally financial in nature, and as such, they are exposed to credit risk. The failure to properly evaluate and document the creditworthiness of a related party can lead to significant financial exposure, regulatory scrutiny, and a host of operational challenges. A sophisticated understanding of the interplay between these two disciplines is therefore crucial for tax, finance, and risk professionals alike.

This training program is meticulously designed to provide a comprehensive understanding of how transfer pricing policies intersect with credit risk management. You will learn to move beyond a siloed approach and recognize how intercompany agreements, payment terms, and financing arrangements directly influence a company's credit exposure. The curriculum covers everything from legal and regulatory frameworks to the practical application of credit assessment techniques within the context of a multinational group. By the end of this course, you will be equipped to implement a robust framework that seamlessly integrates transfer pricing and credit risk, safeguarding your organization's financial health and regulatory compliance.

Duration: 10 days

Target Audience:

• Transfer Pricing Specialists and Tax Managers
• Credit Analysts and Risk Managers
• Corporate Finance and Treasury Professionals
• Internal and External Auditors
• Tax and Legal Counsel
• Professionals from Multinational Corporations (MNCs)
• Consultants specializing in transfer pricing or credit risk
• Anyone responsible for managing intercompany transactions and financial exposure

Objectives:

• Understand the conceptual overlap between transfer pricing and credit risk
• Learn to identify and quantify credit risk in intercompany transactions
• Master the principles of an integrated transfer pricing and credit risk policy
• Gain proficiency in applying credit assessment techniques to related parties
• Understand and mitigate the risks of intercompany financing and guarantees
• Learn to navigate the regulatory requirements for documenting credit risk
• Develop skills in communicating and reporting on transfer pricing-related credit exposure
• Prepare for future changes in regulations and their impact on risk
• Implement a continuous monitoring system for intercompany credit risk
• Learn to use data and analytics for a more accurate risk assessment

Course Modules:

Module 1: Foundations of Transfer Pricing and Credit Risk

• The arm's length principle and its application
• The basics of credit risk and its components
• The nature of intercompany transactions and their financial characteristics
• The key stakeholders in transfer pricing and credit risk
• The importance of a coordinated approach

Module 2: Identifying Credit Risk in Intercompany Transactions

• The different types of intercompany transactions (e.g., sales, loans, services)
• The role of a clear legal agreement
• The impact of payment terms and credit periods
• The importance of an accurate credit rating
• The challenges of dealing with related parties in different jurisdictions

Module 3: Transfer Pricing and Intercompany Financing

• The importance of an arm's length interest rate
• The role of a loan guarantee and its pricing
• The challenges of a thin capitalization rule
• The importance of an accurate credit analysis of a related party borrower
• The risks of a related party loan in a high-risk jurisdiction

Module 4: Credit Assessment of a Related Party

• The use of a qualitative and quantitative analysis
• The importance of a financial statement analysis
• The role of a cash flow analysis
• The importance of a clear and transparent risk rating
• The challenges of an incomplete or unreliable data set

Module 5: The Impact of Credit Risk on Transfer Pricing

• The role of a risk-adjusted return
• The importance of a clear and transparent risk allocation
• The impact of credit risk on a royalty rate
• The challenges of a loss-making related party
• The importance of a documented business rationale

Module 6: Documentation and Regulatory Requirements

• The importance of a Master File and Local File
• The role of an intercompany agreement
• The importance of a clear and consistent documentation of credit risk
• The challenges of a Country-by-Country Report
• The risks of non-compliance and penalties

Module 7: The Interplay of Tax and Credit Risk

• The importance of a clear tax and credit policy
• The role of a withholding tax on interest
• The impact of a tax authority on a credit policy
• The challenges of a tax audit
• The importance of a clear and consistent communication

Module 8: The Use of a Credit Rating Agency

• The importance of a third-party credit rating
• The challenges of a private company rating
• The role of a credit default swap (CDS)
• The importance of a consistent use of a credit rating
• The challenges of an unrated related party

Module 9: The Role of an Integrated Risk Policy

• The importance of a clear and concise policy
• The use of an automated policy engine
• The role of a risk limit
• The importance of a transparent exception process
• The challenges of balancing risk and revenue

Module 10: The Use of Data and Analytics

• The importance of a data-driven approach
• The use of a predictive model
• The role of a portfolio analysis
• The importance of a continuous monitoring of a credit exposure
• The challenges of a large and complex data set

Module 11: The Role of Treasury and Finance

• The importance of a clear and concise communication
• The role of a treasury policy
• The impact of a finance decision on a credit risk
• The challenges of a cross-functional collaboration
• The importance of a clear and consistent reporting

Module 12: The Use of Guarantees and Collateral

• The importance of a clear legal agreement
• The challenges of a cross-border guarantee
• The role of a collateral and its valuation
• The importance of a clear and transparent documentation
• The risks of an unenforceable guarantee

Module 13: Stress Testing and Scenario Analysis

• The importance of a stress test
• The use of hypothetical and historical scenarios
• The role of a reverse stress test
• The importance of a clear and actionable result
• The challenges of communicating stress test results to stakeholders

Module 14: Case Studies and Best Practices

• A deep dive into successful transfer pricing and credit risk frameworks
• The challenges of a real-world implementation
• The importance of a strong cross-functional team
• The role of leadership in adopting a risk-aware culture
• Lessons learned from the field

Module 15: Final Project and Discussion

• A hands-on project to build a risk framework
• The role of new technologies (e.g., blockchain)
• The future of transfer pricing and credit risk
• The importance of a continuous learning mindset
• A final discussion on remaining challenges and opportunities

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 10 working days before commencement of the training.