With transfer pricing penalties now common or automatic in nearly 75% of countries globally, the question is no longer whether you have documentation. It’s whether your entire transfer pricing position can withstand scrutiny from the ground up. That requires regularly monitoring transfer pricing as a core part of your tax planning and compliance risk management program, not treating it as a one-and-done activity.
From mapping your global footprint to identifying your risks and opportunities, you need the right data, analysis, and expert guidance to develop your position and support it.
As you reflect on your 2025 strategy and begin your retrospective documentation, here are a few quick questions to ask:
- Do the outcomes align with your policy?
- Is your transfer pricing policy tax-efficient?
- Have you determined which transactions have the greatest impact on your overall transfer pricing position?
- Are your financial systems aligned to commercial, financial, and tax functions in addition to managing the business?
- Do you have clearly defined roles for the team responsible for managing your transfer pricing obligations?
These questions are a good starting point, but getting your internal house in order is only half the battle. The enforcement environment has shifted dramatically, and the scrutiny doesn’t stop with your documentation package.
The data tells a clear story: the OECD reports nearly 1,000 new transfer pricing cases brought to mutual agreement procedures in its most recent statistics — close to record-breaking levels. And between November 2023 and January 2024 alone, the IRS issued 180 compliance alerts to U.S. subsidiaries of foreign corporations reporting persistent losses or marginal profits — a clear signal that enforcement is no longer reserved for the largest or most complex multinationals.
Tax authorities are reviewing the decisions that happen upstream: how your intercompany pricing was designed, whether your cash pooling rates reflect arm’s-length terms, and whether your financing structures can withstand scrutiny from a structural perspective.
If you have yet to master the ongoing, multi-phase lifecycle from initial value chain analysis through policy design and operational implementation, Exactera can help. Exactera now offers four new advisory services that address the planning and structuring work to determine whether your TP position is truly defensible — before documentation even begins:
TP Planning & Optimization — Establish legally defensible intercompany pricing structures through functional analysis and benchmarking.
Cost Allocation: Document and defend intercompany service transactions, including stewardship analysis and determination of key allocation drivers.
Cash Pooling Analysis: Analyze short-term cash management arrangements, including benchmarking for withdrawal/deposit rates and administrative fees.
Intercompany Financing Support: Specialized analysis for cross-border intercompany financing arrangements, including credit rating assessments, debt capacity modeling, guarantee fee benchmarking, interest rate benchmarking, and thin capitalization reviews.
The urgency of getting this right isn’t theoretical. Consider a recent Exactera engagement with a global leader in medical products headquartered in Europe, with significant U.S. operations across manufacturing, distribution, and equipment leasing. The company was absorbing import tariffs of up to 39% on inbound products with no mechanism to pass those costs back to its foreign principal — a significant distortion in its existing transfer pricing model that created both audit risk and financial exposure. Through Exactera’s Transfer Pricing Planning & Optimization Engagement, we identified the U.S. entity as a hybrid operation spanning three distinct functions and established separate arm’s-length benchmarking ranges for each. This approach resolved pricing distortions across seven distinct business segments and directly strengthened the company’s audit defense position.
This is the kind of transfer pricing strategic work that separates a defensible transfer pricing position from one that simply checks the documentation box. If your organization is navigating similar complexity — whether from tariff exposure, hybrid entity structures, or intercompany financing arrangements — Exactera’s advisory services are designed to get ahead of the risk before it becomes a dispute.
Book a consultation with our tax experts or reach out to your Client Success Manager to learn how Exactera can support your tax strategy beyond master file documentation.
