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. 




Foreword by the Permanent Secretary for Tax of HM Revenue and Customs in the United Kingdom

Business, tax advisers and tax administrations alike see transfer pricing as one of their biggest risks. Business fears double taxation when adjustments to taxable profits have to be made following a transfer pricing enquiry, tax administrations are concerned that multi-national enterprises can choose how they allocate their global profits by the way they organise their affairs and as a result they can allocate profits to low tax jurisdictions without moving the underlying economic activity.


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