2024 EY International Tax and Transfer Pricing Survey released: How to ensure TP certainty in uncertain times?

EY has released the results of its 2024 International Tax and Transfer Pricing Survey. This survey gathered insights from 1,000 senior tax and finance executives across 47 jurisdictions.

Concerns about double taxation resulting from global tax reform are fundamentally transforming the way businesses think about transfer pricing (TP) certainty and their operational TP needs, the 2024 EY International Tax and Transfer Pricing Survey of 1,000 TP professionals shows.

An overwhelming majority of respondents say they face a moderate or significant risk of double taxation related to the Organisation for Economic Co-operation and Development (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) project, which introduces various new tax regimes under Pillar Two, including a new global minimum tax of at least 15% for multinational enterprises. More than 50 jurisdictions worldwide are in various states of implementing those rules, some as early as this year.

The survey shows that the concern about double taxation, broader tax and legislative change and business volatility are driving TP change within organizations in many important ways:

1. Businesses are increasingly seeking certainty on their TP positions to facilitate more predictability in new calculations required to comply with the Pillar Two rules. This is evidenced by a surge in levels of interest in advance pricing agreements (APAs) and dispute resolution programs offered by tax administrations. This proactive approach allows for more certainty in both TP disputes and Pillar Two implementation.
   
   
2. Both executives and TP professionals realize that data, in particular standard transfer pricing data, underpins certainty in controversy and predictability of Pillar Two calculations. The transition into both a tax environment in which the minimum taxes described in Pillar Two, as well as a more transparent world related to public disclosures of the Country-by-Country Reports, are compelling corporations to attempt to standardize their internal data to manage the groundswell of tax authority controversy-related requests and Pillar Two calculations. Specifically, standardized data will help businesses address workload demands and effectively manage current and anticipated tax controversy. More control over their data will also help businesses manage increasing demands for public transparency about their tax payments globally.
   
   
3. TP executives are recognizing that they perform a very strategic role in their organizations. In this new world, where double taxation risks have increased rapidly, TP executives need to be more connected with the rest of the business and rely on technology to perform more traditional operations and compliance functions. This is especially true given the pressures of other externalities, including inflation, rapid changes in supply chains, and initiatives related to their organization’s environmental, societal and governance (ESG) objectives.

The Survey results are summarized in four chapters:

• Chapter 1: How more controversy accelerates the case for a new TP certainty lens
• Chapter 2: How broader pressures on the business are affecting TP
• Chapter 3: What are the critical components of a TP roadmap
• Chapter 4: Five things businesses should do next

The 2024 International Tax and Transfer Pricing Survey can be found at: Driving transfer pricing certainty in uncertain times.