Dealing Effectively with the Challenges of Transfer Pricing

image of Dealing Effectively with the Challenges of Transfer Pricing

This report addresses the practical administration of transfer pricing programmes by tax administrations. Technical analysis of how transfer prices should be computed in accordance with the arm’s length principle is outside the scope of this report. Instead the report focuses on the practical experiences of a number of FTA member countries and some non-member countries. The report discusses ways in which the management of transfer pricing programmes can be optimised, so that transfer pricing audits and enquiries are conducted efficiently and in a timely manner, for the benefit of MNEs and tax administrations alike. It is concerned with the practical steps tax administrations need to take to correctly identify transfer pricing cases that merit audit or enquiry and then to progress those cases to as early a conclusion as possible. 



Executive Summary

The increasingly integrated nature of the global economy and the ongoing importance of Multinational Enterprises (MNEs) in that economy mean that questions of transfer pricing are some of the most significant tax issues that MNEs and tax administrations have to manage. These issues are significant not just because large amounts of tax can be involved but also because they can be complex and their resolution is dependent on a good understanding of the facts and specific commercial context of the case. Consequently, the resolution of transfer pricing disputes tends to be resource intensive for both MNEs and tax administrations.


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