2019 Transfer Pricing and International Tax Survey (EY)

Summary

• The survey included 717 tax and finance executives representing more than 20 industry sectors in 43 jurisdictions within the Americas, Europe and Asia-Pacific.p.2
• Tax risk is by far the most critical issue for 64% of respondents overall.p.12
• 40% of respondents indicate their companies were experiencing double taxation.p.20
• Expectations for challenges to IP rise to 49% (up from 33%), becoming the second most important issue within tax controversy, while expected PE controversy nearly doubles from 20% to 39%.p.20
• Only 37% of companies are currently using any form of APA.p.24
• Only 12% of companies have conducted sufficient modeling to begin making decisions and business changes in response to global tax change.p.33
• Supply chain is the business component most frequently cited as impacted by global tax reform (41%).p.31

Key insights

1. Only 11% of respondents indicate solid satisfaction with their current global transfer pricing documentation.p.14
2. Only 22% of respondents rated their documentation as an opportunity to clearly articulate their transfer pricing policy.p.14
3. Areas previously deemed most critical in tax controversy include transfer pricing of goods (64%), intragroup financial services (41%) and VAT or GST (34%).p.20
4. 84% of respondents say their tax departments are becoming proactively involved in responding to evolving tax rules surrounding IP.p.22
5. One in five executives say their companies experienced disputes surrounding permanent establishment within the past three years.p.23
6. Only 15% rate their confidence in the effectiveness of the MAP process as either high (14%) or very high.p.26
7. 78% say mandatory binding arbitration in bilateral tax treaties would increase their confidence in MAP.p.26
8. The US FDII incentive offers a rate of only 13.125% on intangibles-based income earned overseas.p.30
9. Only 16% say the TCJA is significantly impacting their tax planning and strategies, climbing to 35% for US companies.p.31