The Role of AI in Transfer Pricing: Transforming Global Taxation Processes

Abstract

Transfer pricing is a critical aspect of international taxation that deals with the pricing of transactions between related entities within a multinational enterprise (MNE). Traditionally, this process has been complex and often contentious, requiring intricate data analysis and compliance with diverse regulatory frameworks. The advent of Artificial Intelligence (AI) presents new opportunities to streamline and enhance transfer pricing procedures. This paper explores the transformative role AI plays in transfer pricing, from enhancing data accuracy and compliance to optimizing tax strategies for multinational corporations. By leveraging machine learning, natural language processing, and predictive analytics, AI is reshaping global taxation processes, reducing human error, and ensuring more accurate intercompany transaction valuations. The study provides insights into current AI applications in transfer pricing and outlines potential challenges, such as data privacy concerns and regulatory adoption that may impede AI's full integration. The paper concludes by offering future perspectives on AI's evolving role in global taxation frameworks and transfer pricing enforcement.