Navigating Global Transfer Pricing: Contemporary Regulations and Their Impact on Intercompany Transactions

Cornelia Nastase
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Cornelia Nastase: Bucharest University of Economic Studies, Bucharest, Romania

Oblik i finansi, 2025, issue 1, 69-78

Abstract: With the increasing scrutiny of multinational corporations' tax strategies, organizations such as the OECD have introduced regulatory measures to curb Base Erosion and Profit Shifting (BEPS). This article aims to explore the evolving regulatory landscape of global transfer pricing and its impact on intercompany transactions. The study examines key elements, including the OECD BEPS Action Plan, the arm's length principle, and Advance Pricing Agreements (APAs), assessing their effectiveness in fostering tax compliance and fairness. A particular focus is given to challenges the digital economy poses, where the mobility of intangible assets complicates traditional tax structures. The study also explores the role of bilateral and multilateral tax agreements in mitigating tax avoidance and facilitating cross-border cooperation. Additionally, it assesses the effectiveness of dispute resolution mechanisms in ensuring compliance without hindering global business operations. The study results provide a better understanding of how hybrid arrangements, controlled foreign companies (CFCs), and interest deductibility rules shape corporate tax behaviour. Recent developments analyzed in the work, including the OECD's 2023 update on digital economy taxation and the European Commission's latest transfer pricing report, underscore the necessity for adaptive and harmonized global tax regulations. While BEPS measures have led to increased information exchange and corporate tax compliance, loopholes persist, particularly in developing economies, which remain vulnerable to aggressive tax planning. The rise of complex financial instruments and multinational tax structures further complicates enforcement, requiring continuous global tax governance framework updates. Thus, the findings of this study indicate that coordinated international reform is essential to prevent profit shifting, enhance tax fairness, and support sustainable economic development.

Keywords: transfer pricing; BEPS; tax compliance; international taxation; bilateral and multilateral tax agreements (search for similar items in EconPapers)
JEL-codes: H21 H26 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:iaf:journl:y:2025:i:1:p:69-78

DOI: 10.33146/2307-9878-2025-1(107)-69-78

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