Transfer Pricing and International Tax

Related-Party Transaction Mapping and Risk Assessment

We identify relevant relationships and map transactions between associated entities and other related persons. This includes goods, services, financing, guarantees, royalties, licensing arrangements, cost allocations, management charges, asset transfers and other controlled dealings.

We assess the value, frequency and tax significance of these transactions and identify areas requiring further analysis. The resulting risk profile helps management prioritize material exposures and determine the appropriate level of policy, documentation and review.

Functional and Transaction Analysis

We examine how each entity contributes to a controlled transaction by assessing the functions performed, assets used and risks assumed. The analysis considers contractual arrangements alongside the parties’ actual conduct and the operational substance of the transaction.

This enables the transaction to be accurately understood before a pricing method is selected. It also helps determine which entity performs economically significant activities, controls relevant risks and contributes the assets or capabilities that generate value.

Transfer Pricing Policies and Method Selection

We develop or review pricing policies for material related-party transactions, taking into account the applicable neutral-price provisions, the commercial characteristics of each transaction and the reliability of available financial information.

We help organizations select and apply an appropriate pricing method that supports an arm’s length outcome under Yemen’s neutral-price provisions. Where relevant, internationally recognized transfer pricing principles may be used as a technical reference, subject to the applicable Yemeni legislation and the specific facts of the transaction.

Benchmarking and Financial Testing

Where sufficiently reliable data are available, we perform financial and economic analysis to assess whether related-party pricing is consistent with comparable market conditions. This may include internal or external price comparisons, cost and margin analysis, allocation reviews or other methods appropriate to the transaction and applicable requirements.

We assess the reliability of the available data, the relevant comparability factors and any adjustments required to support a meaningful conclusion. Benchmarking and financial testing are applied proportionately and are not treated as standardized requirements where reliable comparables are unavailable.

Intercompany Agreements, Supporting Documentation and Implementation

We review intercompany agreements to determine whether their terms are consistent with the underlying transactions, the adopted pricing approach and the actual conduct of the parties. This includes pricing terms, service descriptions, financing conditions, intellectual property arrangements, allocation mechanisms and payment responsibilities.

We help organizations maintain a proportionate supporting file comprising relevant agreements, invoices, calculations, allocation workings, financial analysis and evidence of the commercial basis for the transactions. Where group-level or jurisdiction-specific documentation is required outside Yemen, we support its coordination with the relevant entities and advisers.

Cross-Border Transactions and Operating Structures

We assess the tax implications of entering new markets, establishing entities or branches, modifying supply chains, providing cross-border services, arranging financing, licensing intellectual property and restructuring international operations.

Our work considers how the proposed structure affects taxable income, payment flows, withholding obligations, profit attribution and compliance responsibilities. Recommendations are grounded in commercial purpose, operational substance and the legal arrangements required to implement the intended structure.

Broader domestic tax planning or transaction advice that does not depend on an international dimension is addressed through Tax Advisory.

Tax Residence, Income Source and Permanent Establishment

We assess whether an organization’s legal formation, place of effective management, premises, projects, personnel activities or contractual authority may create tax residence, a permanent establishment or another taxable presence under the applicable provisions.

Treaty Relief, Foreign Tax Credits and Double Taxation

Where an applicable tax treaty is in force and relevant to the transaction, we assess the conditions governing residence, income characterization, permanent-establishment exposure and entitlement to treaty benefits. Any treaty treatment remains subject to the terms of the relevant agreement, the required evidence and the procedures applied by the competent authorities.

For Yemeni-resident legal persons deriving foreign-source income, we support the evaluation of available foreign tax credits, subject to the income being included in the Yemeni tax base, the foreign tax having been paid and appropriately evidenced and the credit not exceeding the corresponding Yemeni tax. We also help organize the supporting calculations, payment evidence and related documentation.