Tax authorities around the world are successfully targeting companies over
their treatment of internal transactions, in order to increase their tax
A new survey of 476 companies across 22 countries found that nearly
two-thirds of those asked had been challenged over their tax treatment of
internal transactions in the last three years, while more than 40% of these
audits subsequently resulted in adjustments being made by the tax authorities.
Transfer pricing, which involves transaction between subsidiaries, accounts
for more than half of world trade, and many tax authorities believe
international companies use this technique to avoid tax by moving profits to
low-tax nations, according to the Financial Times.