Manufacturing

The global Manufacturing industry is currently facing a complex and opportunity-rich environment characterized by geopolitical shifts, supply chain diversification and changing tax regulations. Economic success for multinational manufacturers increasingly hinges upon tax transparency, compliance, and transfer pricing transparency.

As nearshoring and reshoring strategies continue to revolutionize where goods are manufactured and how value is created, inflationary pressures and labor cost increases have caused automation, AI, and smart factory models to gain prominence.

Capital-intensive upgrades have resulted in complex intercompany financing and cost-sharing arrangements between entities, while global manufacturers now must comply with OECD BEPS Pillar Two’s 15% minimum tax – necessitating review of supply chain structures and tax efficiency models as well as excess profit allocation rules (OECD BEPS Pillar 1) which could impact consumer-facing manufacturers operating within high margin segments such as luxury goods or electronics.

Common intercompany transactions that come under review include:

• • Cross-border component sales and finished good deliveries;
  • Procurement hubs and central logistics networks;
  • Shared services such as HR, finance, IT and supply chain management;
  • R&D cost sharing agreements as well as IP licensing deals are also frequently subject to scrutiny.