A transfer pricing policy can be technically sound and still struggle in practice.

Business decisions move faster than policies. Finance and tax work from different datasets. Local teams interpret requirements differently. A year-end adjustment resolves one issue but creates another in customs or indirect tax.

Across the ITR conference discussions, a recurring message emerged: transfer pricing needs stronger connections between policy, business activity, financial data and supporting evidence.

Whether the conversation focused on financing, valuations, restructuring or AI, the underlying challenge was similar. Tax teams must be able to explain how their policies translate into actual outcomes and substantiate the decisions behind them.

Closing the gap between policy and execution

Operational transfer pricing sessions highlighted a familiar disconnect: tax writes the policy, but finance and the business determine how it works.

A policy may specify a target margin without explaining which costs enter the calculation, where the data comes from, who monitors performance or when action is required. As companies acquire businesses, introduce entities and change operating models, those gaps become harder to manage.

One practitioner described the effort involved in reconciling legacy and newer ERP systems across thousands of products. Aggregating that information created inconsistencies between commercial invoices, customs values and annual transfer pricing adjustments.

Another described using a central dataset across corporate income tax, VAT and transfer pricing to support a consistent account of the business.

The lesson is practical: a policy needs clear execution requirements. Agreed data definitions, reconciliation rules, responsibilities and escalation points are as important as the methodology itself.

Centralised and distributed models can both work. What matters is that the organisation knows who performs each task and that someone in tax remains accountable for the outcome.

Audit readiness starts with connected evidence

The audit experiences shared at ITR showed why a local file needs to connect to a wider body of evidence.

Practitioners described questions extending into cost bases, invoices, commercial decisions and proof that services were delivered. One audit expanded across corporate tax, international tax, customs and indirect tax departments. Another challenged whether an entity’s losses reflected headquarters’ decisions rather than its transfer pricing.

These experiences raise questions every tax team should be able to answer:

• Do intercompany amounts reconcile across counterparties?
• Can differences between statutory accounts and TP calculations be explained?
• Does actual conduct support the functions and risks described?
• Can the team retrieve the evidence behind a material decision?

Consistency does not mean every tax dataset must be identical. Different regimes have different requirements. It means the differences are understood and explainable.

Local file preparation can become a useful control point: a chance to test whether policy, financial performance and business activity still align.

The APA and MAP discussions reinforced this theme. Inconsistent facts and coordination gaps can delay resolution. Transparency is valuable, but tax certainty also depends on the quality of the information exchanged and the substance of the dialogue that follows.

Bring tax into decisions while they can still be influenced

Financing, valuation and restructuring sessions highlighted the importance of early involvement.

For intercompany financing, setting an interest rate is only part of the analysis. Teams also need to understand borrowing capacity, commercial purpose, transaction terms and who controls the relevant risks.

For valuations, the starting point is defining what is being transferred and why. Forecasts need to connect to wider business expectations, with a record of the assumptions and scenarios considered at the time.

For restructurings and acquisitions, a technically credible model still needs operational support. Finance must be able to implement it. Systems must capture the required information. Local teams need to understand their responsibilities.

These discussions exposed the cost of bringing tax in after key decisions have been made. Options narrow, evidence becomes harder to collect and implementation issues emerge when there is less time to address them.

Tax leaders therefore need relationships with finance, treasury, legal, IT and commercial teams that make early consultation routine. Their contribution is strongest when they can help shape the decision, assess its consequences and establish the evidence required from the outset.

AI’s value depends on the foundations beneath it

AI discussions combined enthusiasm with realism.

Practitioners described faster drafting, research support and help processing large volumes of information. They also reported inconsistent answers, errors and time savings that were quickly absorbed by additional work.

The strongest opportunities were specific: a defined task, reliable inputs, clear review criteria and an identifiable benefit.

The knowledge graph discussion added another dimension. Connecting entities, services, projects and records could help teams locate evidence and trace how it supports a conclusion. For an intragroup services benefit test, that structure could be particularly useful.

But technology choices should follow the problem. Some tasks benefit from AI; others need standard automation, clearer ownership or better data management.

Pillar 2 experiences reinforced that point. Participants described underestimated effort in collecting comparable data, coordinating teams and implementing technology. The benefits depended on building a repeatable process first.

A more connected transfer pricing function

The priority emerging from ITR is to make transfer pricing work throughout the year.

That means translating policy into executable instructions, reconciling data across systems and entities, retaining evidence when decisions are made, and involving tax before commercial commitments become fixed.

Technology can support each of those steps. Its value will depend on how well the organisation understands the process it is improving.

For tax leaders, the opportunity is to turn transfer pricing into a stronger source of business insight and control: identifying issues earlier, explaining outcomes confidently and supporting decisions while there is still time to influence them.

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