Tax authorities worldwide have gotten much more serious about scrutinizing how MNEs implement taxing transfer pricing. This is reflected in the Organization for Economic Co-operation and Development (OECD)’s Base Erosion and Profit Shifting action plan (BEPS), including the new regulations under the U.S. tax reform such as Base Erosion and Anti-Abuse Tax (BEAT) and Global Intangible Low-Taxed Income (GILTI). Consequently, MNEs are much more to focused on implementing robust transfer pricing policies throughout their financial accounting and reporting systems.
Transfer pricing operations are ripe for transformation and automation - Blockchain technology may be the answer.
The financial services industry has already begun using it to facilitate transactions, speed up trade settlement, cut out the need for intermediaries, and increase traceability through transaction chains. Particularly relevant to transfer pricing, companies are also using block chain technology to automate contractual execution, track goods along the supply chain, price intermediate transactions, improve reconciliation of transaction history, and selectively share real-time information with suppliers and customers—which are very similar to the use case for transfer pricing described above. It is only a matter of time before block chain become a foundational technology platform for MNEs to manage their value chain and intercompany transaction.