Due to increased tax authority interest and activity in recent years, transfer pricing risk has been rising. This area is expected to put even more demands on tax teams in the coming years as countries implement the transfer pricing recommendations arising from the Organisation for Economic Co-operation and Development’s (OECD) Action Plan on Base Erosion and Profit Shifting (BEPS). Centralizing transfer pricing activities may facilitate more effective, efficient and consistent compliance globally as country-by-country reporting, master file/local file documentation requirements, and automatic exchange of tax information among tax authorities come into force.
In this light, it is encouraging to see that the transfer pricing functions of most respondents surveyed are either entirely or generally centralized in the headquarters country. Only 12 percent of transfer pricing functions are local or regional.
Additionally, most central tax departments are responsible for transfer pricing documentation for associated domestic entities, and just over half of them are responsible for associated foreign entities. Further, as discussed later in this report, a significant number of companies plan to invest in country-by-country tax reporting software in the next 5 years.
The full report on Global Tax Department Benchmarking offers further insights, and the following infographic provides high-level findings of particular relevance to the transfer pricing space from the survey data to date. (The survey is ongoing.) Key takeaways for Transfer Pricing include:
View a summary of the transfer pricing findings. (PDF 2.39 MB)