Harnessing Artificial Intelligence for Effective Transfer Pricing: Challenges for Tax Authorities

Abstract

The rapid development of Artificial Intelligence (AI) presents a new frontier in various industries, including taxation. This research explores how AI can be harnessed for effective transfer pricing—an essential aspect of international taxation—while simultaneously identifying the challenges it presents for tax authorities. AI can streamline processes, enhance accuracy, and promote compliance, but the complexity of global business operations, diverse tax regulations, and data privacy concerns pose significant challenges. This paper investigates these aspects through a comprehensive exploration of AI’s potential in transfer pricing, providing a detailed analysis of the benefits and challenges, and offering recommendations for tax authorities in adapting to this new technological landscape.