Risks Associated to Transfer Pricing. Mitigation Strategies

Abstract The globalization process led to a significant growth in multinational entities. Consequently, this has determined the appearance of certain risks for companies to face. Therefore, the subject has received particular attention from researchers, especially for its implications in economic environment. In the research literature there is a general idea accepted among the researchers, more specifically that the main factor drawing attention to transfer pricing is its tax implications. Researchers claim that understanding transfer pricing risks is a nowadays key factor for corporate groups. That is why the paper focuses on the topic of risks associated to transfer pricing by performing an empirical study. The analyses’ itself is based on the quantitative method, a questionnaire. The questionnaire respondents are professionals in the economic field, most of them familiar with the notion of transfer pricing. The specialized literature on the topic, as well as the analyses performed shows that multinational companies face significant risks due to their cross-border operations. Most of the time in their activity, professionals face certain difficulties regarding transfer pricing. This seems to be a result of a combination of causes, but all put together showing how important is to acknowledge the risks associated to transfer pricing and find the right mitigation strategies for them.