Tax & Accounting Blog

Why Hungry Governments Are Turning to Transfer Pricing

Best Practices, Compliance, Corporate Income Tax, Forecasting, Global Tax Compliance, Global Tax Planning, ONESOURCE, Tax Provision, Transfer Pricing, Uncertain Tax Positions, US Income Tax Compliance, WorkFlow Manager April 5, 2012

Accounting Today’s latest article Global Governments Are Getting Hungrier, takes a close look at top international tax issues and how the global economic slowdown and increasing budget deficits are causing governments to focus on transfer pricing for additional revenue.

International tax experts like Head of Thomson Reuters ONESOURCE Transfer Pricing group, Brian Tully, were asked to weigh in on the current interest in tax reform.

“It all starts with government,” said Tully. “Because of the global recession and increasing budget deficits, almost all countries have a need for more revenue. One way to get that revenue is to scale back transfer pricing, which is the ability to transfer money and goods out of one country into another. It can be used to lower the tax rate by moving money, goods or intangibles out of a high-tax jurisdiction to a lower-tax jurisdiction. Countries have found if they tighten up their transfer pricing policies, they can make from $500 million to $2 billion in revenue each year. So it’s becoming increasingly popular as a revenue source on a worldwide basis. Countries are adding more auditors to their revenue agencies all over the world – the IRS is adding 900 auditors to focus on this.”

To read the full article, click here.

As a result of the recent reforms, companies are taking a closer look at their transfer pricing process. What have you done to review and tighten up your overall transfer pricing process?

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