Artificial Intelligence in Transfer Pricing: Modernizing Global Tax Compliance

Abstract

The global economic landscape is rapidly evolving, with multinational corporations (MNCs) seeking to optimize their operations through complex supply chains and strategic tax planning. Transfer pricing (TP) plays a pivotal role in determining the pricing of transactions between related entities within these MNCs, significantly impacting tax compliance and revenue allocation among jurisdictions. This paper explores the integration of Artificial Intelligence (AI) in transfer pricing, emphasizing its potential to modernize global tax compliance. We discuss how AI can enhance data analysis, automate compliance processes, and improve decision-making in transfer pricing. Furthermore, the paper examines the challenges and ethical considerations associated with AI adoption in this domain. The findings suggest that while AI presents numerous advantages, a balanced approach that includes regulatory oversight is essential for effective implementation.