Companies are forced to prioritize certain jurisdictions, allocating scarce resources to transfer pricing analyses in jurisdictions perceived to be of higher risk. Foreseeing such risk is a complex endeavor requiring consideration of many factors: local country regulatory requirements; tax authorities’ practices and priorities with respect to corporate income tax compliance; and company-specific factors. While the first of the factors is well-documented and available to tax professionals, until now there has been limited objective data to guide taxpayers through the latter two categories, which the authors explore in a two-part series.
In their part-one article published in Bloomberg Tax, Anna Soubbotina and Gary Chan draw on survey data in the OECD’s recently published annual Tax Administration report and look at select data indicators on tax authorities’ audit practices. They then apply the data to a hypothetical resource allocation scenario for a sample group of countries. In the second article, the authors will explore company-specific factors on which tax authorities around the world are focused.