The Intercompany Recharge Agreement is essential for multinational companies operating in the Philippines that need to establish a formal framework for charging services and allocating costs between related entities. This document is particularly important given the Philippines' strict transfer pricing regulations and tax compliance requirements. It should be used when group companies provide services to each other and need to document the basis for charges in compliance with Philippine transfer pricing rules, especially Revenue Regulations No. 2-2013 and BIR Revenue Regulations No. 19-2020. The agreement typically includes detailed service descriptions, pricing methodologies, documentation requirements, and tax considerations specific to the Philippine jurisdiction. It serves as crucial evidence for tax authorities during audits and helps demonstrate that intercompany transactions are conducted at arm's length.
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Key Requirements PROMPT example:
Intercompany Recharge Agreement
"Need an Intercompany Recharge Agreement under Philippine law for IT support services provided by our Manila tech hub to three Southeast Asian subsidiaries, with implementation planned for January 2025 and specific focus on transfer pricing compliance."
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1. Parties: Identification of the service provider and recipient companies, including registration details and addresses
2. Background: Context of the agreement, relationship between the parties, and purpose of the recharge arrangement
3. Definitions: Key terms used throughout the agreement
4. Scope of Services: Detailed description of services to be provided and recharged between the parties
5. Calculation of Charges: Methodology for calculating recharges, including cost allocation methods and markup principles
6. Payment Terms: Timing and method of payments, currency, and invoicing requirements
7. Transfer Pricing Compliance: Provisions ensuring compliance with Philippine transfer pricing regulations
8. Records and Documentation: Requirements for maintaining supporting documentation for recharges
9. Tax Provisions: Treatment of applicable taxes, including VAT and withholding tax obligations
10. Term and Termination: Duration of the agreement and termination provisions
11. Confidentiality: Protection of confidential information exchanged under the agreement
12. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes
1. Intellectual Property Rights: Used when services involve the use or creation of intellectual property
2. Regulatory Compliance: Added when specific industry regulations apply to the services
3. Force Majeure: Include when parties want specific provisions for unforeseen circumstances
4. Data Protection: Required when personal data processing is involved in the services
5. Audit Rights: Include when parties want specific audit provisions beyond standard records requirements
6. Foreign Exchange Provisions: Include when transactions involve foreign currency exchanges
7. Service Level Requirements: Used when specific performance standards need to be maintained
8. Dispute Resolution: Optional detailed procedures for handling disputes before litigation
1. Schedule 1 - Service Descriptions: Detailed descriptions of each service category being recharged
2. Schedule 2 - Pricing Methodology: Detailed calculation methods, including cost pools and allocation keys
3. Schedule 3 - Mark-up Schedule: Applicable mark-ups for different types of services
4. Schedule 4 - Supporting Documentation Requirements: List of required documentation for each type of recharge
5. Schedule 5 - Key Personnel: List of key contacts responsible for managing the recharge process
6. Appendix A - Service Level Metrics: Specific performance indicators and measurement criteria
7. Appendix B - Template Reports: Standard formats for recharge reports and invoices
8. Appendix C - Transfer Pricing Documentation: Required transfer pricing forms and documentation templates
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
Technology
Financial Services
Professional Services
Shared Services
Retail and Consumer
Healthcare
Energy and Resources
Telecommunications
Real Estate
Industrial Products
Business Process Outsourcing
Relevant Teams
Finance
Legal
Tax
Treasury
Compliance
Shared Services
Financial Planning and Analysis
Transfer Pricing
Corporate Governance
International Tax
Group Accounting
Financial Operations
Relevant Roles
Chief Financial Officer
Finance Director
Tax Director
Legal Counsel
Transfer Pricing Manager
Group Financial Controller
Compliance Officer
Treasury Manager
Shared Services Director
Financial Planning Manager
Tax Compliance Manager
Corporate Counsel
International Tax Manager
Finance Operations Manager