Distribution and manufacturing model design
Distribution and manufacturing model design
TaxIQ Africa can provide high-level technical support to multinational groups seeking to optimize their supply chains while maintaining robust tax compliance.
- We assist in defining the specific profile of each entity to ensure profits are allocated according to the actual functions performed, assets used, and risks assumed (FAR analysis). We look beyond simple compliance to help design the One-Firm borderless model that TaxIQ Africa champions
Distribution and manufacturing model design
What to Learn More About Distribution and manufacturing model design?
Functional Characterization & Structuring
We assist in defining the specific profile of each entity to ensure profits are allocated according to the actual functions performed, assets used, and risks assumed (FAR analysis). This includes
Manufacturing Segmentation
Designing models for Full-fledged Manufacturers, Licensed Manufacturers, or Contract/Toll Manufacturers (where the entity earns a stable, low-risk return).
Distribution Profiles
Structuring entities as Full-risk Distributors, Limited Risk Distributors (LRDs), or Commissionaires, which is crucial for managing Permanent Establishment (PE) risks.
Segmented Accounting Support
Helping you set up your ERP or accounting systems to track profitability by transaction type.
Method Selection & Benchmarking
Selecting the correct OECD-recognized transfer pricing method is vital for defensibility. TaxIQ Africa provides:
Cost Plus Method (CPM) Reviews
For manufacturing hubs, ensuring the appropriate markup is applied to the cost base.
Resale Price Method (RPM) & TNMM
For distribution arms, identifying the correct arm's length operating margin using advanced global databases.
Segmented P&L Analysis
Helping clients separate their manufacturing and distribution financials to prove that each segment is earning an arm's length return.
Supply Chain Tax Optimization
We look beyond simple compliance to help design the One-Firm borderless model that TaxIQ Africa champions:
Regional Hub Setup
Advising on the tax implications of setting up centralized procurement or distribution hubs in markets like Kenya or Uganda.
Customs & Indirect Tax Alignment
Ensuring that the Transfer Pricing values (for Income Tax) are consistent with values declared for Customs and VAT, reducing the risk of double taxation or penalties.
Risk Allocation & Contractual Frameworks
We ensure that the on-the-ground reality matches the legal documentation:
Intercompany Agreement Drafting
Creating technical agreements that clearly define who bears the risk of inventory obsolescence, currency fluctuations, or bad debts.
Substance Reviews
Verifying that the entity assuming the risk (the Entrepreneur) has the qualified personnel to actually exercise control over that risk.
Compliance with Emerging Rules
We help manufacturers and distributors navigate new global and regional mandates:
Amount B (Pillar One)
Assessing if your distributors qualify for the simplified and streamlined approach for baseline marketing and distribution activities.
Pillar Two Readiness
Evaluating how centralized profit models in distribution hubs are affected by Global Minimum Tax (15%) rules.
Local Compliance
Managing the specific e-invoicing and documentation requirements (like EFRIS in Uganda or eTIMS in Kenya) to ensure that intercompany payments remain deductible.