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By Todd Wolosoff, Juan Ignacio De Molina and Gary Thomas of Deloitte.

Dear readers,

The OECD's base erosion and profit shifting (BEPS) project aims to make global tax distribution fairer but, while countries struggle to implement new policies and regimes, increased controversy may be inevitable and transfer pricing may be at the centre of global tax controversy for years to come.

The BEPS guidance calls for increased compliance burdens, particularly through transfer pricing documentation, where a master file, local file and country-by-country report are now expected by individual tax authorities. In addition, some governments have gone further than the OECD recommendations and implemented their own tailored BEPS measures.

This may lead to an environment of increased complexity for tax and transfer pricing executives at multinational companies.

Although controversy has become a fact of life for large multinationals, with this more difficult environment, managing risk has become more important than ever.

This selection of articles highlights certain changes in the dispute environment and some of the controversy risks companies face. We provide insight into how to approach these risks and what new systems multinationals should put in place to reduce the chance of unnecessary controversy.

We focus on intellectual property (IP) and how, as a result of the new OECD BEPS measures, it is an increasingly important part of a multinational's transfer pricing consideration and is attracting more attention from tax authorities. Many aspects of IP, including issues involving definition and valuation are discussed.

Asia-Pacific is a particularly difficult region for multinationals to navigate. We have focused on China, India and Japan, in particular, to examine how they are developing in terms of transfer pricing controversy and we look at how these major countries will impact a multinational's controversy defence strategy.

As an increasingly important area of their overall risk management programme, we have looked at the part advance pricing agreements (APA) play in controversy risk management. Multinational companies should consider the use of APAs as an important part of their controversy strategy.

We also look at how tax authorities' attitudes and approaches are changing towards controversy, to allow taxpayers to look ahead and adapt accordingly.

As multinational companies are likely to face an increasingly complex global transfer pricing landscape, it has never been more important to have a comprehensive global strategy to manage controversy risk in the coming years.

Todd Wolosoff

Global Transfer Pricing Leader

Juan Ignacio De Molina

Transfer Pricing Partner

Gary Thomas

Transfer Pricing Partner

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