Transfer Pricing meets Big Data & Machine Learning

The rise of cloud-based multinational entities (MNE's) like Google, Facebook, Amazon etc. has proven that far from being a passing fad, virtual and cloud-based businesses have come to stay creating a new frontier for both tax regulators and departments. Global tax laws have however, failed to keep pace with the fast-paced evolution in the tech world creating challenges for tax assessors and departments as they race to determine, plan for, as well as comply with new standards. While uncertainties persisted, loopholes were exploited mainly in the knotty area of Transfer Pricing (TP). Increasingly improving tax audit procedures have made the area of TP potential minefield for multinational companies not just regarding compliance with overall tax rules but also, regarding its tax planning activities. Multinationals like GOOGLE, Amazon and Microsoft, have fallen foul of new regulations with costs ranging from a couple of millions to billions of dollars.