Artificial Intelligence in Transfer Pricing: Balancing Automation with Tax Regulation

Abstract

The advent of Artificial Intelligence (AI) has transformed various sectors, and transfer pricing a critical component of international tax regulations—is no exception. This paper explores the intersection of AI technology and transfer pricing, examining the benefits and challenges that arise when automating compliance processes within tax regulations. As multinational enterprises (MNEs) increasingly adopt AI-driven solutions to streamline their transfer pricing strategies, the necessity of aligning these technologies with existing tax laws and regulations becomes paramount. This research underscores the need for a balanced approach that leverages AI's potential to enhance accuracy and efficiency while navigating the complexities of tax compliance and the potential risks of over-reliance on technology. Ultimately, the paper argues for a collaborative framework between AI developers, tax authorities, and businesses to ensure sustainable and compliant transfer pricing practices.