Valuations and Business Restructurings

STI Taxand assists clients in establishing fair and accurate valuations of businesses and intangibles associated with business reorganisations such as tax planning, mergers and acquisitions.

Business Valuation in Cyprus

The hallmark of STI Taxand approach is to make sound forecasts by understanding the dynamics of the marketplace that is employed for clients seeking an accurate measure of business or intangibles’ value. We analyse our clients’ business and relevant industry and apply appropriate valuation that is consistent with the arm’s length principle.

Intangibles Valuation

STI Taxand can assist multinationals to valuate intangibles by applying the necessary compliance and appropriate tax planning applicable for each entity. We perform defensible rate evaluations using benchmarking and other income-based valuations with a robust result.

Using the comparable transactions method and utilising the appropriate comparability criteria we produce the desired results. One of those criteria is the comparability with respect to the intangible property transacted and the profit potentials of the licensor and licensee.

There must be a high level of comparability between the unrelated and related party transactions, for this method to be effective. There are two types of comparable analysis related to unrelated party transactions as listed below:

  • Comparing licensing agreements between a related tested party and unrelated parties based on information received from the client.
  • Comparing licensing agreements among entities unrelated to the tested party based on information obtained from databases maintained by third-party providers.

Financial Assets Valuations

FASB Interpretation No. 48 (FIN 48) has a crucial impact for transfer pricing in terms of disclosures of multinationals. FIN 48 outlines procedures that recognise and measure uncertain tax positions that must be disclosed in the financial statements.

STI Taxand assists clients with several aspects of FIN 48 implementation including:

  • Reviewing intercompany transactions to determine the appropriate units of account and material income tax positions, and to create appropriate recognition and measurement methods. Identification of appropriate units of account and material income tax positions, creation of appropriate recognition and measurement methods in order to examine the intercompany transactions.
  • Advising on audit policies and administrative procedures in accordance with the national requirements imposed by the tax authorities in different countries.
  • Preparing transfer pricing documentation to support the management’s opinion that the company follows a sustainable and compliant tax position.
  • Creating an implementation process to update FIN 48 analysis on a quarterly and annual basis.

STI Taxand has broad expertise and specialisation in fulfilling the transfer pricing compliance requirements for large and middle-market companies in a number of industries. Our transfer pricing Cyprus team comprises of the best professional experts in transfer pricing using best practices tailored to local country regulations.

Business Restructurings in Cyprus

Following the strategic business decisions related to internal restructuring processes and mergers and acquisitions (M&A), transfer pricing plays an important role within them.Taxand experts assist clients with various aspects of business restructurings in Cyprus and M&A activities, such as due diligence support and post-merger integration management. Our advisory work in this area includes:

  • Assessing clients’ transfer pricing risks during the due diligence processes (buy-side);
  • Valuation of intangible property to determine an arm’s length taxable basis in the ownership country (sell-side);
  • Valuation of intangible property in the context of business combinations (IFRS 3);
  • Development of a “blueprint” for new or revised global transfer pricing policies in the context of post-merger integration; and
  • Valuation of intangibles or owner’s equity, and design of transfer pricing policies in the context of business restructuring.

STI Taxand team of experts can design a tailored transfer pricing system taking into account the business model of our clients while complying with the arm’s length principle. This is a complicated step, however out transfer pricing teams has the required knowledge and skills to provide you with robust transfer pricing deliverables, addressing all your concerns and any practical issues that might arise.