The paradigm change in transfer pricing regulations: study of the current situation and reflections on its evolution

Abstract

The development of the digital economy has caused a change in the economic and value generation models of many multinational groups, allowing them to generate profits in jurisdictions without the need to have a significant physical presence there.

This phenomenon produced a crisis in the traditional principles of international taxation, in general, and specifically in transfer pricing, incapable of avoiding the erosion of tax bases towards jurisdictions with lower taxation, thereby generating evident social alarm. In response, the socalled BEPS Projects have been internationally developed, and are leading to a true gradual paradigm shift in transfer pricing regulations with a progressive displacement or reconfiguration of the ruling arm’s length principle with greater concern for the alignment of taxation with the value generation process.