How AI Is Transforming Transfer Pricing: Implications for Global Tax Enforcement

Abstract

The increasing complexity of international business transactions, especially in the context of global trade and multinational corporations, has necessitated more advanced methods of regulating and enforcing tax compliance. Transfer pricing, the practice of determining the value of transactions between related parties, plays a significant role in ensuring the fair distribution of tax revenues across jurisdictions. With the advent of artificial intelligence (AI), traditional transfer pricing methods are undergoing significant changes. AI offers powerful tools to analyze vast amounts of data, identify trends, and optimize compliance. This research paper explores how AI is transforming transfer pricing and the subsequent implications for global tax enforcement. It delves into the technical mechanisms of AI in transfer pricing, examines its potential benefits, and addresses the challenges it poses to global tax authorities. Ultimately, this paper evaluates the role of AI in shaping the future of transfer pricing and global tax governance.