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TP developments are rapidly creating the new normal in global TP controversy

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Kerwin Chung and Carlo Llanes Navarro of Deloitte provide an insight into ITR’s transfer pricing controversy guide, produced in collaboration with global transfer pricing experts from Deloitte.

Transfer pricing (TP) controversy has accelerated since the 2017 publication of revisions to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Data compiled by the OECD pursuant to the BEPS Action 14 Mutual Agreement Procedure (MAP) Statistics under the Agreed Reporting Framework show a steady increase in new MAP requests filed with respect to TP adjustments:


TP cases


YoY increase



















These statistics tell only part of the story.

More importantly, the revisions made to the 2017 TP Guidelines and other recent developments are rapidly changing the nature of controversies and how they are resolved. These developments fall into four categories:

  • New and updated substantive TP rules;

  • More extensive data for tax authorities to identify potential TP risks;

  • Concerted efforts to track TP disputes with an emphasis on resolving double taxation in a timely manner; and

  • The potential for extraordinary events.

In this series of articles, the authors have provided a glimpse of how these developments are rapidly creating the new normal for global TP controversy.

Chapter 2 discusses how the resolution of controversy has changed with the introduction of a more efficient system to handle MAPs and advance pricing agreements (APAs) during the pandemic in the US, a process that is being copied globally. Post-pandemic these virtual systems will continue to have a significant impact on TP controversy and dispute resolution.

Chapter 3 highlights the recent increased reliance of tax authorities on CbCR data and how the data reported in the CbCR during the COVID-19 pandemic could impede its use. The authors discuss how changes in the number of employees and losses reported by MNCs during the pandemic may ‘muddy’ the CbCR data and prevent tax authorities from seeing relevant changes in business structures and overall substance. This chapter also provides a glimpse of how the EU Public Country-by-Country Reporting initiative may have little impact on risk assessment but increases concerns on how the public may interpret the data.

Chapter 4 describes several types of business disruptions brought about by COVID-19 pandemic and the TP risks that may arise from these disruptions. The authors provide some recommendations on how to manage these risks. The article also touches on key features of the OECD Guidance on the impact of COVID-19.

Chapter 5 talks about the latest developments on intra-group debt financing that have been influenced by 2020 OECD financial transactions guidance. The article highlights the recent increase in disputes with respect to financial transactions and the issues raised by tax administrations around the world. While issues regarding economic substance are seen in half of these disputes, tax administrations have raised issues related to the role of passive association in loan pricing and have used ‘options realistically available’ in challenging financial transactions.

In Chapter 6, the authors discuss the recent decisions in Adecco and Cameco and why there could be a shift in methodology involving intangibles. Important regulatory changes regarding intangibles around the world is also briefly discussed in this chapter.

Chapter 7 provides a snapshot of the future of TP dispute resolution, including the proposals contained in the October 2020 pillar one blueprint, multilateral negotiations, joint audits.

Chapter 8 reports on the results of the global TP controversy survey, giving a bird’s eye view of the most recent trends on the TP issues and approaches happening around the world.

Finally, another theme dominating the controversy landscape is the introduction of BEPS 2.0. The pillar one and pillar two blueprints propose a new inclusive taxation framework from the point where BEPS Action 1 ends. This framework aims to address the complex issues arising from digital businesses. While global financial leaders endorse a global minimum tax rate to level the playing field and work to simplify the proposed framework, the ambitious deadline of introducing additional refinements in the model this year fast approaches. Chapter 9 walks through the latest developments through the eyes of a TP controversy specialist.

In a tax world that would have been unrecognisable a mere decade ago, the challenges in the world of TP have grown increasingly complex. This issue hopes to provide some guidance on the threats as well as opportunities in the new normal world of TP controversy.

Click here to read Deloitte's TP Controversy Guide 2021

Kerwin Chung



Deloitte Tax LLP

T: +1 202 879 3108


Kerwin Chung is a principal of Deloitte Tax LLP’s Washington national tax office TP team, and leader of the firm’s national APA and MAP group.

Kerwin has more than 25 years of TP experience, specialising in representing clients in APA, MAP, planning, and examination matters with tax authorities in the Americas, Europe and Asia. His clients include US and foreign-based multinationals in industries including automotive, financial services, pharmaceuticals, and telecommunications. He is an active member of the American Bar Association (ABA) Tax Section Transfer Pricing Committee, having moderated a panel on TP-down economy issues in 2009 and presented on a panel discussing the Internal Revenue Service (IRS) APA programme in 2011.

Kerwin has a JD degree from Harvard Law School and a bachelor’s degree in business administration – accounting and real estate, from the University of Hawaii. He has been included in Euromoney’s ‘Guide to the World’s Leading Transfer Pricing Advisers’ since 2002 and in ITR’s Tax Controversy Leaders guide since 2015.

Carlo Llanes Navarro



Deloitte Philippines

T: +63 2 581 9035


Carlo Llanes Navarro is Deloitte’s Southeast Asia TP leader and heads Deloitte’s Southeast Asia TP centre located in Manila, Philippines. He specialises in TP matters, international corporate restructuring and planning, cross-border taxation, and tax-effective supply chain transformations.

Before joining Deloitte, Carlo led TP and international tax practices of Big 4 firms around Southeast Asia. He has more than 20 years of experience working in various jurisdictions in Southeast Asia as an international tax and TP practitioner, giving him practical experience in dealing with tax authorities of these countries.

Carlo has assisted clients in various phases of TP engagements, from planning, documentation and audit defense to negotiating APAs and MAPs. He has an excellent reputation in handling TP audits and bilateral negotiations. As a recognised subject matter expert, he has published various articles in international tax journals, covering issues on permanent establishments, taxation and TP aspects of business restructuring, and the latest developments in the area of TP in Southeast Asia.

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