Transfer pricing: A practical perspective for 2020
First published in Bloomberg BNA, July 2014
The world of transfer pricing is in the midst of important changes, with various transformations likely as the year 2020 approaches. The evolution of this landscape can be viewed under the lens of East versus West—or developing and emerging economies versus more developed and mature economies. The disparity between interpretation and enforcement of transfer pricing standards across East and West remains a significant source of multi-jurisdictional disputes, as global bodies and individual countries adapt and evolve the rules.
For the third consecutive year, 20 percent of respondents from multinational enterprises in the Taxand 2014 Global Survey confirmed that transfer pricing tops the list as the most challenging aspect of global taxation. In the West, tax authorities are looking to preserve or expand the tax base, placing pressure on multinationals to contribute their ‘‘fair share’’ to the public coffers. And in the East, tax authorities look to interpret and redefine the terms to similarly increase the tax base, sometimes producing interpretations that are at odds with historical treatment of business activities in the West. Although transfer pricing is inherently subjective, the one thing that is certain is that change is constant and inevitable.
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