Our work during 2022 spanned from assisting start-up companies expanding abroad for the first time to advising large multinationals on multibillion-dollar transactions and acting as expert witnesses in tax disputes. Transfer pricing and related tax guidance and rules have changed, macroeconomic factors continue to challenge corporations, and many clients have restructured. The OECD was particularly productive in 2022, releasing new Transfer Pricing Guidelines (TPG) as well as making progress on Pillars 1 and 2. Brazil is on a path to aligning with the OECD TPG, while the UK and Mexico have notably updated their compliance requirements. Supply chain issues, high inflation and interest rates, and other economic factors have made maintaining transfer pricing policies and hitting arm’s length results a more difficult proposition. Restructurings have been driven by business issues, including acquisitions and divestitures, realigning supply chains to increase resiliency, and mitigating tax risks relating to BEAT and DEMPE. Our experience with disputes indicates that it is becoming increasingly hard to reach principled resolutions at the field level.
This coming year, we expect these trends to continue, and we expect a further pickup in disputes as the first COVID-affected tax years come under audit in certain jurisdictions. As ever, we remain at your service and look forward to working together to address your transfer pricing needs.