Comparing North American Transfer Pricing Policies in the Digital Services Sector

Abstract

The digital services sector has revolutionized business operations, leading to a significant shift in how companies approach transfer pricing. Transfer pricing refers to the pricing of goods, services, and intellectual property between related business entities within multinational enterprises (MNEs). This research paper examines the transfer pricing policies in the United States and Canada, two key players in the North American digital economy. It aims to identify similarities and differences in their regulatory frameworks, compliance requirements, and enforcement mechanisms, ultimately providing insights into the effectiveness of these policies in addressing the unique challenges posed by digital services. Through comparative analysis, the paper concludes that while both countries have established robust frameworks, the United States’ approach is characterized by more complex regulations, whereas Canada’s framework emphasizes simplicity and flexibility.