A convergence of trends, including global tax reform, supply chain reconfiguration and digital transformation, is putting pressure on transfer pricing (TP), increasing the risk of tax controversy. Fifty-six percent of participants in the 2021 EY International Tax and Transfer Pricing survey believe there is uncertainty in TP, which is creating an unstable environment and decreasing their ability to depend on past settlements and court cases for current enforcement guidance. Despite this instability, over 50% of respondents report they still rely on their past experiences to assess TP risk. To proactively manage TP risk, companies need to understand how TP audits are currently being resolved and what information tax administrators are requiring — they also should consider proactive certainty and cooperative compliance programs. For insights on these issues, read EY’s recent article “How leaning into transfer pricing transformation helps manage tax risk.”
Additional information and links to past newsletters can be found in the attached PDF.
Flash Newsletter attachment (Issue 41)