Artificial Intelligence in Transfer Pricing: Unlocking Opportunities for Tax Authorities and Multinational Enterprises

Abstract

The incorporation of Artificial Intelligence (AI) in the tax continuous around the the world is transforming the grounds of the transfer pricing for the multinationals (MNE). The transfer pricing the mechanism to determine the rates for the transactions between the affiliated entities in different tax regimes, is a focal point of international tax compliance. In the process of crossing boundaries, the procedure of verification that transfer pricing is assessed correctly and impartially becomes more complicated. AI brings with it opportunities to both tax authorities and MNEs to automate the transfer pricing process, cut the possibilities of non-compliance, and greatly enhance the decision-making capability. This paper discusses the ways AI can be employed in transfer pricing through the examination of an application of the technology to the field. Along with that we will also look at the difficulties related to AI integration, such as the regulatory issues, ethical principles, and the necessity of qualified personnel. Moral considerations aside, this research showcases the bright and dark sides of AI incorporation into transfer pricing as a support to multinationals as to tax officers.