KBKG: Tell us about yourself, Alex.
Alex: I grew up in the Tampa/St. Pete area, but I now reside in Michigan with my wife and daughter. I met my wife as an undergrad, attending school in New Orleans, a city that attracts people from all walks of life. I’ve always been interested in economics, which is what led me to my profession as an economist. I enjoy learning how businesses operate on an international scale. Early in my career and training, I was drawn to international relations and trade, so transfer pricing was a natural fit. I have always wanted to live and work overseas, and this was a great avenue to do so.
KBKG: How did you get your start in the profession? Where did it take you?
Alex: In 1997, I joined a Big 4 firm that was looking for an economist to join their transfer pricing practice in Washington, DC. After three years, I jumped at the chance to join the firm’s Australian team in Melbourne. Early on, I was inspired to seek an opportunity to live overseas by my grandmother, who moved her family to Brazil during the Depression. My mother grew up in Brazil, and I was always fascinated by their stories and experiences living in a new culture. So naturally, this was an opportunity I would not pass up.
We stayed in Melbourne for four years until I had an opportunity to start a transfer pricing practice back in Michigan, and we decided to put down roots to stay. We built a successful team during the great recession, but I decided to start a transfer pricing practice as demand grew for these services in the middle market. I was then approached by a top Michigan-based CPA firm well known for its work with internationally focused companies. While there, I had the opportunity to work with many like-minded firms across the US, assisting clients in underserved markets.
KBKG: What brought you to KBKG?
Alex: Over time, I became the external transfer pricing resource to many professional service firms across the US. Many CPAs work with great cross-border companies, and transfer pricing can be critical to the success of their clients. Transfer pricing fits well into KBKG’s mission of delivering value-added services to CPAs and clients. Now, we have joined forces to offer transfer pricing to KBKG’s CPA partners and clients, and KBKG services to longstanding transfer pricing clients.
KBKG: How does your practice fit in with KBKG’s other services?
Alex: After US tax reform, transfer pricing now represents a tax savings opportunity that complements the established research and development tax credit, cost segregation, and other tax incentive programs that KBKG provides. Our goal is to find opportunities to lower our client’s tax burden and help them operate more efficiently. By bringing in transfer pricing, we are expanding upon the tax-saving strategies we employ with the help of our CPA partners.
KBKG: Do you get mistaken for a CPA? How does the role of an economist differ?
Alex: Many CPAs are surprised that I’m an economist and not a CPA. Economists are often seen as having little relevant practical experience. Contrary to that viewpoint, I’m heavily involved with my clients’ businesses and invested in their success. I understand their challenges and provide custom strategies that fit their unique needs based upon 20-plus years of experience with US and international companies, large and small.
KBKG: What is Transfer Pricing as a service?
Alex: The cross-border transfer prices of goods, royalties, services, and loans drive how much income tax a multinational company pays by country. We assist US and international companies in establishing, documenting, and defending transfer pricing practices for the IRS and foreign tax authorities.
KBKG: How can Transfer Pricing add depth to a CPA’s service model?
Alex: Two ways: First, many US and foreign-owned multinational clients are actively looking for service providers in this area, and relatively few firms have dedicated transfer pricing teams. Transfer pricing can effectively serve as an introduction to new multinational clients. Second, projects may require client interviews, and I find that CPAs can often identify new opportunities by being part of discussions with key management team members.
Regardless of whether a CPA wants to be involved in a project or just needs regular updates, KBKG serves as an extension of a CPA’s team, working seamlessly to provide value-added services. We also invest heavily in CPA education, so our CPA partners feel confident in offering transfer pricing as part of their suite of services.
KBKG: How can a business identify Transfer Pricing issues?
Alex: All companies with cross-border operations have transfer pricing issues. The prices charged across borders affects how much tax is payable in each country a country operates. Consequently, tax authorities are concerned about multinationals underpaying taxes through incorrect transfer prices. A business with international operations needs to be able to explain to a tax auditor how their company operates and justify why the prices or profits are reasonable.
Tax authorities worldwide often challenge companies that are not charging “arm’s-length” pricing on intercompany transactions. Additionally, transfer pricing audits can result in substantial additional tax and penalties on a global basis. In fact, over 100 countries now enforce transfer pricing rules, and the threshold for audit activity has reached the middle-market. That said, there are some practical strategies that companies can employ to support their position under tax audit. Furthermore, some companies can realize substantial tax savings under US tax reform through corrections to transfer pricing.
KBKG: Alex, thank you so much for your time today. If companies or CPAs have questions about Transfer Pricing, how can they contact you?
Alex: If you have questions, I am always here to assist. You can contact me at [email protected] or give me a call at 877.525.4462 x170.