Transfer Pricing International Tax Controversy: An In-Depth FAQ

Transfer pricing is the method by which multinational enterprises (MNEs) set prices for transactions between related entities across borders, directly impacting how profits are allocated and taxed in different countries.
Controversies arise due to differing national rules, the risk of profit shifting, double taxation, and disputes over the “arm’s length” standard.
Recent developments (including OBBB, effective July 4, 2025) and ongoing OECD initiatives are reshaping the landscape, with increased scrutiny, new compliance requirements, and evolving dispute resolution mechanisms.