Transfer pricing used to be a somewhat arcane area of tax, governing how multinational corporations structured, priced, and documented their intercompany transactions. Often, transfer pricing was relatively low on the priority list of tax departments, and transfer pricing issues rarely rose to the interest level of the C suite. But no more! Heightened compliance and transparency requirements, along with growing interest by tax authorities in protecting their local tax base, have led to multinationals coming under increased public scrutiny with respect to their international structures and transfer pricing practices.
The intention of this article is not to rehash the complexities of the new U.S. tax rules or their impact on transfer pricing. Rather, our focus is on how multinationals, especially small to mid-sized ones, can take a fresh look at their transfer pricing policies to avail themselves of some of the new planning opportunities arising from U.S. tax reform. This fresh look benefits not only those multinationals that have historically been proactive in organizing their international structures and intercompany transactions to reduce their tax burden, but also those that have not.