Leveraging Artificial Intelligence in Transfer Pricing: Empowering Tax Authorities to Stay Ahead

Abstract

The hasty advance of Artificial Intelligence (AI) has altered quite a number of fields, finance, manufacturing in particular, tax collection with the most severe effects. The article digs through the area where transfer pricing and AI converge as it suggests that tax authorities can leverage AI to fortify regulatory capabilities thus achieving complia, nce amidst an environment with increasingly complicated multinational operations. The method of setting prices for transactions among subsidiaries using the transfer pricing method has been the point of governance review by tax authorities across the globe. Thanks to the power of AI to process huge amounts of data, identify regularities, and automate a number of routings, it can give tax authorities the necessary tools to be one step ahead of tax evasion and bring about just tax practices. Additionally, the study talks about the uses of AI in transfer pricing audits, the issues that tax authorities cope with and the ethical issues that may appear from the use of AI in this area.