The Role of Transfer Pricing in the Digital Transformation of North American Taxation

Abstract

The digital transformation of economies has significantly altered the landscape of taxation, particularly in North America. This paper explores the role of transfer pricing in the context of this transformation, addressing how digital business models challenge traditional tax frameworks. Transfer pricing refers to the pricing of intercompany transactions and has gained increased attention as multinational enterprises (MNEs) leverage digital technologies to operate across borders with unprecedented ease. The research outlines the implications of transfer pricing for tax compliance and administration, discusses emerging challenges posed by digital business activities, and evaluates potential regulatory responses. The findings underscore the necessity for tax authorities to adapt their approaches to transfer pricing, ensuring fairness and transparency in tax systems while maintaining competitiveness in a rapidly evolving digital economy.