PwC: It’s unclear whether parent group will help local subsidiaries through crisis

It is not clear to what extent the parent groups will support the local subsidiaries cover their losses suffered during the lockdown period, said Ionut Simion, Country Managing Partner PwC Romania, as he introduced a report on transfer pricing.

Transfer pricing policies were developed and implemented by companies in a period of economic growth and are therefore now being re-examined, he explained.

The groups are assessing the medium and long-term impact of the pandemic, taking into account measures to streamline and reduce costs.

Therefore, the evolution of the relations with the affiliated parties has a high dose of uncertainty.

Three out of four Romanian subsidiaries of multinationals believe that the total revenues of the companies they represent will decrease by up to 25% in 2020, compared to 2019, as a result of the health crisis, according to the survey "Transfer Pricing Challenges during and post- COVID-19," made by PwC Romania between April and May.

At the same time, 15.5% estimate that their revenues will decrease by 25% to 50%.

Some 14% of the polled subsidiaries anticipate operational losses due to dysfunctions in the economy.

Some 14% of them reported a decrease in demand from affiliates.

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