E&Y warns transfer pricing costs are soaring

More than half of multinationals are paying more money than a year ago to
comply with ever-complex transfer pricing regulations, a survey by Ernst &
Young has found.

A poll of 850 multinationals by the firm in its annual Global Transfer
Pricing Survey
showed that 53% of respondents had experienced an increase
in transfer pricing compliance costs.

Ernst & Young said the increased costs were a result of increasing
complexity in transfer pricing, which had come about as customs and tax
authorities around the world merged.

‘Companies need to manage their financial risks with greater precision, as
enhanced transfer pricing documentation requirements have intensified
responsibilities to actively report and justify the impact of their tax
position,’ said E&Y transfer pricing expert John Hobster.

Other findings in the report showed that 52% of respondents have undergone a
transfer pricing examination since 2003, with 27% resulting in adjustments by
tax authorities.

Of the respondents, 72% believed the level of transfer pricing expertise
within tax authorities is ‘good’ to ‘very good’.

Further reading:

the full survey here

Multinationals ignoring consolidated tax base

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