In a recent episode of The Transfer Pricing Method, host Adriaan van der Heijden sat down with Borys Ulanenko (Arms Length AI) and Maikel Verhoeven (Quantera Global) to discuss how technology, global tax reform, and shifting geopolitics are reshaping transfer pricing. Below are the key highlights and practical takeaways from their conversation, tailored for tax and finance leaders facing new compliance realities.
Transfer Pricing Faces Increased Scrutiny
Transfer pricing is now high on the agenda for tax authorities worldwide. Rising geopolitical tensions, new trade barriers, and updated regulations are putting multinational organizations under increased pressure. Compliance is no longer just about keeping documentation up to date, it’s about anticipating rapid changes and making sure policies can adapt.
To meet this challenge, companies should:
- Regularly review and update transfer pricing policies
- Assess whether current documentation and arrangements are flexible enough for sudden market or regulatory shifts
- Prepare for the possibility that supply chains and transaction flows may need to change due to tariffs or legislative reforms
Operational Transfer Pricing: From Periodic Adjustments to Proactive Management
Traditional approaches relying on annual or quarterly transfer pricing adjustments are often no longer sufficient. The expansion of customs duties and more dynamic supply chains mean that operational transfer pricing needs to be managed in real time. Companies are expected to align transfer pricing closely with customs valuation and ensure documentation is always audit-ready.
A practical approach includes:
- Coordinating transfer pricing and customs compliance teams
- Proactively tracking and documenting the rationale behind adjustments
- Ensuring documentation not only meets compliance requirements but also tells a clear, consistent story
Audit readiness is now about being able to show clear logic and evidence for every key decision, not just producing paperwork.
Remote Work and the Demand for Flexible Models
The widespread adoption of remote and hybrid working has introduced new complexities. While many organizations have established clear remote work policies to avoid unexpected tax exposure, these must be reviewed regularly. Transfer pricing models need to remain practical for an evolving workforce, balancing flexibility for business operations with ongoing compliance requirements. Flexibility is critical, but so is a clear framework to prevent cross-border tax risks.
Evolving Legislation and the Data Challenge
Increased reporting obligations are here to stay. Countries like Denmark and India now demand highly detailed transfer pricing forms, and tax authorities are leveraging this data to carry out more targeted audits. As a result, companies must ensure their transfer pricing documentation is both robust and logically structured.
Key points to focus on:
- Preparing benchmarking studies in advance of regulatory deadlines
- Maintaining consistency between master and local files
- Anticipating likely audit questions and preparing strong supporting narratives
Authorities are no longer satisfied with “box-ticking” exercises. They expect detailed, coherent explanations that link business activity to transfer pricing outcomes.
Technology and Artificial Intelligence in Transfer Pricing
AI and automation are changing how transfer pricing is managed. Many organizations now use artificial intelligence for benchmarking, initial documentation drafting, and data research. General-purpose AI tools may be best suited for routine supportive tasks, while critical or repetitive compliance processes benefit most from specialized transfer pricing solutions.
For best results:
- Use general AI tools for everyday research and communication tasks
- Choose specialized TP software for high-stakes or large-scale compliance work
- Always validate automated outputs with professional expertise to ensure accuracy and context
While data security concerns have been (partly) addressed as providers improve controls, it remains vital to have a strict policy and monitoring in place to ensure your company complies with legislation.
The Evolving Skillset for Transfer Pricing Professionals
As automation replaces much of the routine work, the skills required in transfer pricing are shifting. Strong communication, cross-functional collaboration, and the ability to synthesize and present information clearly become more important. Technical knowledge of transfer pricing remains essential and is now complemented by basic data analysis and automation capabilities.
Today’s professionals are expected to:
- Understand core TP theory and practice
- Leverage data and technology for efficient compliance
- Engage proactively with internal stakeholders and authorities
- Contribute strategic insight to business decisions
Key Takeaways
- Regularly revisit transfer pricing policies to keep pace with legislative and geopolitical developments
- Manage operational transfer pricing in real time and integrate it with customs and supply chain oversight
- Invest in robust, narrative-driven documentation that addresses the real questions tax authorities will ask
- Use technology and AI to streamline processes, but never replace professional judgement
- Focus on communication and collaboration skills to add value beyond technical compliance
FAQs
What is the greatest transfer pricing challenge for multinationals today?
Adapting policies and documentation fast enough to keep up with shifting legislation, data requirements, and the increasing focus of tax authorities.
How is technology changing the compliance process?
AI and automation handle more routine work, allowing professionals to focus on narrative, strategy, and proactive risk management.
What new skills are expected from transfer pricing professionals?
Technical expertise, basic data/automation skills, and the ability to communicate and collaborate across teams.
Conclusion
Transfer pricing has evolved far beyond compliance exercises. Today, it requires continuous monitoring, proactive management, and the ability to clearly explain every decision to tax authorities. As scrutiny from tax authorities and data demands grow, organizations must be ready to adapt, leveraging both new technology and strong professional expertise. This combination will set the new standard for effective transfer pricing governance.