Ruling and Pre-ruling
Pre-ruling as part of the process can prevent you and your business some unpleasant surprises and headaches. The pre-ruling procedure will in light the situation so at the end of it all the parties involved will know what are the expectations and obligations they are confronting with.
There are rules set by the government that occurs all of the individuals and companies within the country regarding tax payments. It is recommended to obtain advance tax ruling regarding transactions, preliminary decision or pre-ruling, this way the government authority is responding to a request by an individual or corporation for an opinion about the tax and legal consequences of its approach to a future transaction.
At the end of the pre-ruling process, the tax consequences of a transaction are clear to all parties involved in the proceeding.
Transfer pricing between related companies is without any doubt one of the most common pre-ruling issues. In such cases, it is necessary to examine the tax consequences before the transaction takes place and present them in the financial statements legally and accurately in order to avoid involving the IRS. In addition, complex tax issues might arise when engaging in transactions involving profits, assets, and funds in different countries. It is important to receive professional consulting before entering into such a transaction and that they work with a tax representative who can guide and represent the taxpayer’s interests with the tax authorities in the best possible way. The taxpayer can then make a fully informed decision as to whether to carry out the transaction, change its framework, or withdraw.
That's why professional tax consulting in such cases is so important even though the pre-ruling procedure is not required by law, but it is highly recommended in appropriate cases as it helps entities avoid complex procedures and tax payments in the future.