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Transfer pricing controversy: Settling into the new normal

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Paul Riley, Shaun Austin and John Breen preview ITR’s controversy guide, produced in collaboration with global transfer pricing (TP) experts from Deloitte.

Going into 2020, observers foresaw continued economic growth. Despite the overarching spread of uncertainty from various directions including Brexit, trade frictions, and proposed digital services taxes, it was expected that cross-border trade – including intra-firm trade within multinational enterprises (MNEs) – would continue to expand. Arising from this, many envisaged that the trend of tax authorities devoting ever-increasing attention and resources to TP matters would continue.

Consistent with this view, statistics issued by the OECD Centre for Tax Policy and Administration indicated an increase in the number of requests for advance pricing agreements (APAs) and mutual agreement procedure (MAP) assistance, indicating that these dispute resolution mechanisms were coming under greater demand than ever.

In early 2020, the OECD issued 'Transfer Pricing Guidance for Financial Transactions', the final major guidance under BEPS Action Items 4 and 8 through 10. Moreover, the OECD continued to pursue its work in the digital area, with these ongoing developments expected to increase the levels of TP controversy still further.

Against this backdrop, the appearance of the novel coronavirus (COVID-19) came as a dramatic shock. As national governments took steps to limit the spread of the virus, and as business activity became severely impacted, governments in many countries adopted interim measures to inject cash into their economies. Alongside this, audit, APA and MAP activity either stopped or significantly declined in most countries.

However, such activity, particularly in connection with TP audits, is now restarting or increasing across many countries. As national governments inevitably face pressure to balance their fiscal ledgers, intensified enforcement activity is likely to become more probable in the future. In this environment, MNEs should anticipate an acceleration of the forces that, even before the pandemic, were pointing toward an increased prevalence of double taxation and TP controversy.

Insights from Deloitte experts

In this context, professionals from many Deloitte member firms bring their extensive experience to bear on the challenges posed by the evolving TP environment, and offer strategic suggestions for ways to mitigate controversy and to foster efficient resolution of disputes that do arise.

The first article in this issue discusses the impact of the COVID-19 pandemic on TP compliance and potential disputes. The authors draw parallels with previous economic downturns in order to offer suggestions for practical ways to prevent disputes in an unsettled environment.

The next article considers the impact of recent developments on specific industries, focusing on the hospitality, health care, and consumer products sectors. This article considers how the COVID-19 pandemic has caused disruption to the status quo, as well as tackling broader TP considerations that are likely to emerge going forward.

Apart from the pandemic, there have been several significant judicial decisions in the TP area, which are reviewed, alongside consideration of their potential broader impact on future disputes.

The guide's attention then shifts to analysing the impact of recent guidance from the OECD. Articles address the guidance concerning financial transactions, including interaction of the recent guidance alongside ongoing developments and tax authority approaches in this area. A separate article considers whether new OECD guidance should apply to existing TP disputes that pre-date the issuance of that guidance.

A subsequent article considers the impact of the CbCR regime and other information reporting protocols (including DAC6), in the context of the broader availability of information to tax administrations. The practical impact of heightened operational standards and tighter timelines for dispute resolution procedures arising from Action 14 are also considered.

To round out the issue, controversy and dispute resolution developments in specific geographic regions – Latin America, the Asia-Pacific, and the developing environments in Africa, the Middle East and Southeast Asia, are explored.

Click here to read the entire 2020 Deloitte/ITR Transfer Pricing Controversy guide

Paul Riley

Senior partner

Deloitte Australia

T: +61 416 002 516


Paul Riley is the global TP leader and a senior partner in Deloitte Australia's tax and legal practice. He has more than 33 years of experience, including 10 years with the Australian Taxation Office (ATO) and 23 years in public practice. Paul has held many senior positions during his 19-year career at Deloitte, including roles as managing partner of Deloitte Australia Tax & Legal (2012-2015), Victoria Tax & Legal leader (2011), and Deloitte Asia-Pacific TP leader (2009-2012). He was appointed leader of the global TP practice effective January 2017. In his global role, he is responsible for overseeing Deloitte's global TP strategy.

Paul is experienced in all facets of TP, including successfully resolving a number of TP audits and APAs, large-scale global, regional and local documentation studies, and planning for cross-border transactions for many global businesses across in the automotive industry.

Paul has been listed in Euromoney's Expert Guides for his TP work since 2008. He is a leader in shaping the thinking in the changing Australian tax landscape by regularly submitting Deloitte's views on policy matters to government.

Shaun Austin


Deloitte UK

T: +44 0 7775 807510


Shaun Austin is the TP leader for Deloitte's North-South Europe practice, and has been responsible for Deloitte's European transfer pricing practice since 2013. He has more than 18 years of experience as a partner, and 25 years of experience in the TP practice.

Shaun has extensive experience in advising a broad range of clients in all areas of transfer pricing including planning, documentation, audit defense and MAP, and debt pricing.

Shaun has consistently been listed in Euromoney's guide as one of the world's leading TP advisors and won the award for ITR's European Transfer Pricing Practice Leader of the Year in 2019.

Shaun studied at Cambridge University and is a member of Institute of Chartered Accountants in England & Wales (ACA).

John Breen

Managing director

Deloitte US

T: +1 202 220 2113


John Breen is a tax managing director in Washington's National Tax-Transfer Pricing team at Deloitte. He has more than 20 years of experience handling complex TP matters.

John served for 10 years in the TP branch (Branch 6) in the Office of Associate Chief Counsel (International), Internal Revenue Service (IRS), including service as senior technical reviewer and later as branch chief. While in the IRS Office of Chief Counsel, he served for five years as a US delegate to OECD Working Party 6.

Before joining Deloitte, John was counsel at a national law firm, where he focused on TP matters, APAs and related matters. He specialises in TP planning and controversy matters, attribution of profits to permanent establishments, and treaty-related issues.

John holds a bachelor's degree from Cornell University, a JD from the University of Georgia School of Law and a master of laws degree from Georgetown University Law Center. He is a member of the District of Columbia Bar.

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