Well, it’s not like we have a crystal ball or anything, but we are paying attention to tax authorities around the world—and from what we can tell, the news isn’t great.
While we were hoping that 2022 would bring fewer COVID challenges to taxpayers, Omicron has revived social distancing and remote work in many places, at least for the moment, and some industries could see changes to their benchmark rates due to the disruption.
Transfer Pricing Challenges
For transfer pricing, this means…well, complications. With databases on a two- to three-year delay, arm’s length ranges may be out of whack, and so tax executives can expect to explain why they are experiencing losses (hint: be convincing).
Mergers and acquisitions seemed as fashionable as face masks in 2021, hitting an all-time high of $5.53 trillion, which means that businesses will have to revisit their transfer pricing models, intercompany agreements and transactions, and get the transfer pricing initiatives of those merging companies on the same page.
And let’s not forget transfer pricing regulations, which continue to change all the time. In 2021, Italy came out with new guidance. Jordan, Thailand, and Paraguay formalized new transfer pricing regulations, and the UK is introducing new transfer pricing documentation requirements soon.
Sorry to break it to you, but new legislation usually means more scrutiny—and that’s exactly what we’re anticipating for 2022.