Q&A: Impact of HMRC’s new transfer pricing guidelines

Cross-border structures and arrangements have been under closer scrutiny for many years but the last year has seen a step change in the stance adopted by tax authorities worldwide.

How has the transfer pricing landscape evolved?

The ever-growing complexity of modern businesses and rising levels of national debt among G7 countries is propelling increased scrutiny of the tax arrangements of multinational enterprises (MNEs). The challenging macroeconomic conditions are unlikely to abate in the foreseeable future and the political pressure on national governments to squeeze more tax out of MNEs who are perceived as not paying their fair share is only likely to intensify.

As is the case in many areas where the US leads the rest of the world follows. The Internal Revenue Service (IRS) recently adopted a markedly more combative stance on transfer pricing (TP) as exemplified by disputes with Microsoft for $29.8bn and Airbnb for $1.3bn...