AI in Transfer Pricing: Balancing Compliance, Efficiency, and Ethical Challenges

Abstract

One overall shaping technique that has changed the way multinational organizations (MNEs) deal with tax, process optimization, and the moral standards of international trade has been the integration of artificial intelligence (AI) in transfer pricing. Transfer pricing, which is the evaluation of goods and services bought or sold to the firms that belong to a multinational company, is one of the factors that compulsory for tax compliance and financial reporting. This paper is a delve into the correlation of AI and transfer pricing with respect to AI's contribution to compliance with the stated regulations, as well as reduce operations for the sake of efficiency, and to tackle ethical issues, which are the "first hurdles" in transfer pricing practices. The paper postulates that even though AI may lead to significant benefits, it can also entail difficulties that demand for a complete system of regulation. Moreover, the study has shown that the need for specific solutions, which is implemented through coherent and global practices is the cross-border transfer pricing procedures' shift of focus. Hence, the research underscores the importance of continuous communication and teamwork among a wide range of stakeholders in order to enable AI to deliver its full potential but in the process to minimize its associated risks as well.