PDA

View Full Version : Transfer Pricing



Terd Ferguson
12-09-2007, 05:50 AM
Does anybody know about doing Transfer Pricing at a place like Deloitte? do you have to have a phd or is ma just as good? what is starting salary? what is salary after 10 years? how fun is it? is the job repetitious or do you constantly have to learn new things and have new challenges? how many hours a week? how competitive is the industry? etc....

YoungEconomist
12-10-2007, 06:13 PM
Nobody has info on transfer pricing? I was hoping someone would have some kind of info, because I heard that some firms (Deloitte, PriceWater House Cooper, etc) hire PhD economists in their transfer pricing department. However, I have no clue what a transfer pricing consultant does, and my google searches haven't informed me much. I'm just wondering more about job duties (although if people have info on salary or other things that would be helpful as well).

jbs02002
12-10-2007, 06:22 PM
CRA has a transfer pricing practice as well. Basically, transfer pricing is a type of business consulting in which consultants help management figure out how to minimize their tax bill by shifting write-offs to high-tax states/countries and revenues to low-tax states/countries.

octavio
12-10-2007, 10:45 PM
Not sure how helpful this is, but -- a friend in my masters program has an offer from E&Y to work in transfer pricing next year. Starting salary around $60k.

confuzed
12-11-2007, 04:28 AM
To add to the last post, one of my TAs graduated with a Ph.D. and is now working for PWC and is earning a good 6 figure salary, if I am not mistaken.

YoungEconomist
12-11-2007, 06:56 AM
What fields do people usually specialize in for careers in transfer pricing? IO? Econometrics? Finance? Something else?

confuzed
12-12-2007, 05:24 PM
IO is definitely one of them.
I think skills from econometrics are really helpful too because there is a lot of data manipulation.
Something I have heard from the grad students in my school.

1941
01-03-2008, 09:06 PM
I am a tp consultant with PwC. I have a BS in econ and am working on a JD. Increasingly it is becoming difficult to get hired by a good firm without a PhD in econ or a JD in tax law. I would say that most firms would prefer the PhD in econ (that is what we are currently hiring) but a JD will make you more money in the long run as most transfer pricing disputes require an in depth understanding of the regs more than the simple economics required by the IRS. The economics can only be pushed as far as the IRS agent will accept. Simplicity is the best defense and some of the agents are pretty slow.

Most of transfer pricing work is compliance oriented (50%) with about 25% planning (not for tax maximization but for compliance) and the rest a mix of the interesting stuff like IP valuation, APA's, and competent authority disputes. For an in depth look at tp go to the PwC website or Makenzie (sp?).

As for salary, undergraduate new hires come in at the same level as tax accounting new hires (for the big 4). This will vary according to market but generally between 50-60k. It is rumored, but I am not 100% sure, that PhD new hires right out of grad school are coming in right at 100k. Same for JDs. I hope this helps.

shootermcgavin7
01-03-2008, 10:05 PM
I would kill myself if I had to work in transfer pricing.

wassup23
01-17-2008, 03:54 AM
I'm in the field.

Depends on location, but let's say NYC salaries.

What I believe to be the pay bands (some have overlap to allow for exceptions):

Analyst/Associate - $40 - $65
Sr. Associate - $60 - $110
Manager - $90 - $160
Sr. Mgr - $150 - $220
MD/Partner A - $200 +
Partner B - $300 +

YoungEconomist
01-17-2008, 04:21 AM
I'm in the field.

Depends on location, but let's say NYC salaries.

What I believe to be the pay bands (some have overlap to allow for exceptions):

Analyst/Associate - $40 - $65
Sr. Associate - $60 - $110
Manager - $90 - $160
Sr. Mgr - $150 - $220
MD/Partner A - $200 +
Partner B - $300 +

Where does a new PhD start? How many years (on average) to move up to each level after that?

wassup23
01-17-2008, 08:50 AM
I would imagine a PhD starts at Sr. Associate, likely at the top of the pay band with some sort of verbal assurance that if you prove yourself, you could get promoted in one year, that is, as long as you don't suck.

1941
01-17-2008, 03:16 PM
those are a little low, especially the upper limits of the associates and seniors. At PwC, PhD associates are starting at close to 100k and a second year associate with a credential will make more than 65. The numbers posted above look more like Big 4 Tax accountants. Also, there are not that many transfer pricing partners so their book of business is much larger than the average tax partner. TP partners make much more than 300k, even the new ones.

Terd Ferguson
01-18-2008, 03:48 PM
I'm a little less interested in how much it pays, but rather how interesting the work is. Possible responses I'm looking for is

"I've worked in the field (or know someone in the field) and ..."
1) ... it's not that cool. After 2 yrs you know how to do everything and its very repetitive.
2) ... it's constantly challenging. You keep having to learn new things.
3) ... you are stuck using models that you might not agree with.
4) ... there is flexibility in how you value things.
5) ... its an easy job to only work 50 hrs a week and make bank.
6) ... be prepared to work 60+ hrs a week.

Any information like this would be great. Even a more detailed description of what it is would be really nice. I know the basic idea is moving **** around in different countries for the same firm to maximize tax stuff, but that still doesn't really let me know what you would be actually doing. I also didn't know if getting an LLM with your PhD would help you or not.

TPRecruiter
01-18-2008, 05:56 PM
I've been searching for TP people for a little while now and working with several big name industry side clients, not consulting. I'm sure you know the glory of industry side is that you never have to say "billable hours," again.

Anyway, as far as what they're looking for, PhD, JD or better still LL.M are always preferred, but one candidate I'm working with who has just a few years experience has a Bachelors in Finance, and my clients want to see him.

The bottom line is that anyone who is willing to overlook a candidate because they dont have any sort of Doctorate degree is fooling themselves if they think they're getting the best candidates.

1941
01-19-2008, 11:09 PM
OK, this might be long but it think it will answer your questions. First, you can be hired into Big 4 transfer pricing with only a bachelor degree (preferably in economics and then finance, we don't even interview accounting majors) but someone with an advanced degree will come in making about 80% more than an undergraduate [look at figures below/above]. Currently, we are looking for PhDs, but have historically looked for JDs as well. If you have a JD but no economics or finance background then a LLM in Tax would most likely be needed to get hired.

The daily work is somewhat repetitive. IRS rules dictate A LOT of what can be done with transfer pricing. The idea that anyone will come in and create some great new transfer pricing model that will make their clients money is delusional. Mostly, we come in and try to fit a particular client's financial information into the framework set forth by the IRS. Any planning study that is done will basically show a client how to set up their transfer pricing in such a way as to avoid penalties. In the past, when other countries did not have structured transfer pricing rules, it was easier to be creative and shift income. Now, having to take both countries' laws into effect, there is little room for creativity for the majority of international businesses. However, there are some new areas of transfer pricing that are quite interesting, such as options modeling for the transfer of intangibles and cost sharing structures that distribute income based on profit drivers.

For the first year or two you just really learn about the rules and don't have too much room for decisions. After 2 years, you start to get some room to make choices (different ways to go about the same problem). The interesting part is that you get to deal with many different companies and many different transfer pricing structures. That is where the variety is. I guess the real function of a transfer pricing consultant is to fit each unique company into the rules provided by the IRS and other country tax authorities.

Work life balance depends on the office (more hours in NY then Atlanta) but is generally better than the rest of the firm (if you are in Big 4). I average between 40 and 50 and only hit the sixty hour mark once or twice a year. Some people will see this and disagree but like I said its all about the office. I can also work from home sometimes with no issues. Yes, you still need to bill hours but you only need about 85% utilization to be OK. There is not much of a busy season (mostly for 9/15 deadlines) and the travel is not bad (only to client sites for interview, maybe 2-3 days per month). If you work for a big firm then there are a lot of perks, free meals all the time, lots of vacation, happy hours, and you work with a lot of younger people which makes for a better work atmosphere.

The most important thing to keep in mind is that the IRS and world governments are increasing their scrutiny of transfer pricing, which means the field is growing. Many firms are creating new offices around the country and the demand for qualified transfer pricing professionals is really high. I get a new offer to leave every week and after each project I usually end up getting a call from the client trying to make an offer. There is a lot of money to be made in this field. Sure, it can sometimes be a little boring, but so can any job.

I hope this helps. If I were you I would go on the interviews and talk to the people in each specific office. Ask them how much they work per week and if their boss gives them the flexibility to make decisions. Good luck.

1941
01-19-2008, 11:12 PM
Oh yeah, getting a LLM on top of a PhD would not really help. All you need is the credential to get in and then it is more about your ability to perform and experience.

Terd Ferguson
01-20-2008, 04:26 PM
Does having a masters instead of a PhD hurt you eventually? I you had to choose between taking 2-3 more years getting the PhD or getting 2-3 years more work experience. Which way is the way to go?

YoungEconomist
01-20-2008, 06:04 PM
Does having a masters instead of a PhD hurt you eventually? I you had to choose between taking 2-3 more years getting the PhD or getting 2-3 years more work experience. Which way is the way to go?

I think it probably depends on the specific job. For example, I heard in consulting it's very useful to have the PhD because you start off at a higher position, and can move much more easily to the highest ranks. You'll see some people at consulting firms who have really high positions with only a masters, but it's probably relatively rare and I imagine that they needed many years of consulting experience to make that happen.

xy31
01-22-2008, 08:14 PM
What kind of 2nd round interview questions do they ask for TP jobs? I have to give a 45 minute presentation of my job mkt paper and then are scheduled to meet with 4 differnt people (each 30 minutes). I am guessing mostly behavioral and "fit" questions????

robbieboy74
05-23-2011, 07:22 AM
try explaining THAT to the family:

"Well, basically I move stuff around so that big companies can pay less taxes."