Transfer Pricing and Taxation: A North American Perspective on Digital Services

Abstract

In recent years, the proliferation of digital services has transformed the global economy, reshaping business models and challenging traditional tax and transfer pricing frameworks. This paper explores transfer pricing and taxation issues in North America, particularly focusing on the digital services sector. It examines the complexities of establishing appropriate pricing mechanisms for cross-border transactions, analyzes current taxation approaches, and considers the implications of recent regulatory and policy developments. With the rise of digital service giants, North American governments, especially the United States and Canada, are grappling with creating effective transfer pricing and taxation frameworks to avoid base erosion and profit shifting (BEPS) while ensuring a fair distribution of tax revenue. This research emphasizes the role of multilateral cooperation and the OECD’s guidelines as crucial components in addressing these challenges.