Transfer Pricing

Transfer Pricing & IC-DISC — Elevate EBS
Elevate EBS · Transfer Pricing & IC-DISC
Tax-Optimized · Compliance-First

If you cross a border, you are already pricing.

Every intercompany transaction between related entities in different countries — goods, services, royalties, loans — carries a price, and that price decides how much income tax you pay and where. Set it without documentation and you are exposed on both sides. And if you export U.S. product, an IC-DISC can convert ordinary income into qualified dividend income.

Schedule a call →
What it is

Two levers, one international footprint.

Transfer pricing governs what related entities charge each other across borders. Tax authorities in every jurisdiction require those prices to be set as if the parties were unrelated — the arm’s length standard — and they require it to be documented. Without a defensible study, both countries can assert that income belongs to them, and you end up taxed twice on the same dollar, plus penalties. Done properly, transfer pricing is not just a compliance obligation; it determines where income is recognized and at what rate it is taxed.

IC-DISC is a separate and long-standing federal export incentive. A U.S. exporter forms a domestic international sales corporation, pays it a commission on qualified export sales, and deducts that commission at ordinary rates. The IC-DISC itself is not taxed — it distributes the commission to its shareholders as a qualified dividend. The result is a permanent rate arbitrage on export profit, available to manufacturers, distributors, and even some engineering and architectural firms working on projects abroad.

Who it’s for

Worth a look if goods, services, or money cross a border.

  • Manufacturers exporting U.S.-made product
  • Distributors of U.S.-produced goods sold abroad
  • Companies with foreign subsidiaries or affiliates
  • Businesses licensing IP or brand to related foreign entities
  • Groups making intercompany loans across borders
  • Engineering and architectural firms on foreign projects

These two often show up together, because the same companies have both problems. But they are independent. You can need transfer pricing documentation with no export benefit available, and you can qualify for an IC-DISC with a purely domestic corporate structure that sells abroad.

Why it’s worth doing

Defend what you have. Capture what you are missing.

Avoid double taxation

Documented arm’s length pricing is your defense when two tax authorities each claim the same income. Without it, you can pay both.

Penalty protection

Contemporaneous transfer pricing documentation is what stands between an adjustment and an adjustment plus substantial penalties.

Export rate arbitrage

An IC-DISC converts a slice of export profit from ordinary income into qualified dividend income — a permanent, recurring benefit.

How it works

We bring it to the table and manage it end to end.

Step 01

Assess

We map the intercompany flows and export sales and identify both the exposure and the opportunity before you spend anything.

Step 02

Benchmark

Comparable third-party transactions are analyzed to establish and support arm’s length pricing.

Step 03

Structure

Where an IC-DISC applies, the entity is formed and the commission methodology is set to maximize the benefit.

Step 04

Document

The study and the ongoing commission calculations are documented and coordinated with your CPA each year.

Contemporaneous, or it does not protect you.

Transfer pricing documentation prepared after an examination begins does not do what documentation is supposed to do. The penalty protection depends on having the study in hand before the return was filed — which means this is work you do in advance, not work you do when the notice arrives. IC-DISC has its own timing rule: the entity must be in place before the export sales it earns commissions on. Both reward planning and punish reaction. Same standard we bring to everything: optimize aggressively, but never past the line.

Let’s talk

Find out where your cross-border dollars are landing.

A short call is enough to tell whether you have transfer pricing exposure, an unclaimed export benefit, or both — before you commit to anything.

Schedule a call →

Elevate EBS (Employer Benefits Solutions) · Houston, TX. Transfer pricing studies and IC-DISC structures are prepared by qualified tax professionals and implemented in coordination with your tax advisor. Benefits depend on your structure, jurisdictions, and transaction profile. This material is for informational purposes and is not tax or legal advice.

Scroll to Top