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March 4, 2019
Intercompany financing transactions | A growing source of transfer pricing risk
Tax administrators are increasingly focused on the transfer pricing treatment of intercompany financing transactions (ICFT). This increased scrutiny is driving a new phase of tax disputes, with little consistency in ICFT treatment between jurisdictions — although the Organisation for Economic Co-operation and Development (OECD) continues its work to address the issue. In the meantime, taxpayers are struggling to understand what is acceptable in this changing environment. An EY report takes an in-depth look at the different types of intercompany financing transactions, identifies some of the potential audit triggers and new types of scrutiny being applied by tax authorities, and provides some practical guidance for companies to consider implementing.