A transfer pricing health check is a structured review of a multinational group’s transfer pricing position. It tests whether policies, intercompany agreements, documentation and actual results still reflect how the business operates. It also shows where gaps create exposure to tax authority challenge, or leave opportunities on the table. For years, it has been the default way for groups to take stock: a periodic review, often run every few years or after a major event, that shows where the group stood at a fixed point in time.

That model is reaching its limits. “A health check is a snapshot. It’s static, reactive and backward-looking, and by the time it lands, the business has already moved on,” says Prasad Pardiwala, Aibidia’s Global Head of Tech-Driven Transfer Pricing Solutions.

Continuous assessment has long been the ambition of heads of tax and CFOs. It wasn’t practical while the data sat in ERPs, spreadsheets, legal entity records and local filings, each in its own format. AI is removing that barrier, making it faster to extract, connect and interpret information wherever it lives.

The need has never been greater. 78% of tax teams worked on at least one transfer pricing audit or inquiry in the past two years, according to Aibidia’s State of Transfer Pricing 2026 report. Tax authorities use increasingly sophisticated analytics to spot inconsistencies across tax, accounting and publicly available data. “If they can see the full picture, you need to see it first,” Prasad says.

That is the thinking behind Aibidia Health Check. It takes the familiar exercise beyond the one-off snapshot. The result is an ongoing, evidence-backed assessment of risks and opportunities that can be rerun as the business changes, without rebuilding the context each time. Being able to produce documentation is not the same as understanding exposure. The questions that matter are where the group is vulnerable, how much it could cost and what to address first. The strongest audit defense answers them before scrutiny begins.

Transfer pricing policies are set at a point in time, but the business keeps moving

Supply chains change, teams relocate, entities are acquired, and local managers make decisions the policy never anticipated. Documentation can keep describing the model as designed while operations move away from it.

"As you get further out from when that initial fact-finding was done, the actual facts on the ground start to evolve," says Katheryn Weiller, Managing Director, Transfer Pricing Advisory at Aibidia. Her example: a group bases senior leadership in one country to show that key risks are controlled there. The team later moves back to headquarters. "That might never make up the tax chain until you do those interviews a couple of years later. But that information is sitting in a personnel org chart."

Tax and transfer pricing teams may hear about these changes late. "Whether we like it or not, tax and TP are not the first ones to know," says Prasad. Business teams know when something changes; they do not necessarily know which changes matter for transfer pricing. This is why building relationships with operations is part of this readiness.  

The cost of finding out late

A transfer pricing issue identified in one year may also have implications for earlier or later years, depending on the facts and circumstances. Historical issues are particularly difficult because evidence becomes harder to reconstruct and opportunities to change the underlying facts have passed.

Many groups conduct comprehensive reviews every three to five years, or after significant events. Katheryn challenges that approach: "How do you know when something significant has changed if you don't have a really good definition of the events that trigger it?"

Leadership changes, acquisitions and large transactions are obvious triggers. Smaller changes can accumulate unnoticed. Periodic reviews leave gaps between them. An assessment that can be rerun as business facts change helps close them.

The survey illustrates the gap: only 7% formally monitor transfer prices monthly, while half reported moderately or very significant year-end adjustments. Meanwhile, 32% did not know how much their organization spends responding to transfer pricing audits, and 23% spent more than 200 internal hours on audit response in the previous year.

Audit-ready doesn't mean bulletproof

No transfer pricing position is immune to challenge . Readiness means knowing which positions carry the greatest potential challenge and exposure, how strong the supporting evidence is, and where relevant tax authorities are focusing attention. Teams can then decide whether to prepare supplementary analysis to defend a position,  and review the arrangement and make necessary changes prospectively.

That view cannot come from documentation review alone.  

According to the State of Transfer Pricing 2026 research, financial performance issues (such as an operating loss earned by an entity characterized as limited risk) were the leading identified audit trigger at 41%, followed by high-risk transaction types at 23%. Documentation gaps, such as missing or incomplete documentation, accounted for 10%.

Public statements also matter. "Is your Head of Marketing claiming to the Wall Street Journal that marketing is the key to this company's success, but your local files consistently treat marketing as entitled to only routine returns?” Katheryn asks. A useful assessment considers whether tax documentation is consistent with the broader evidence about how the business operates, including how and where value is created and how decisions are actually made within an organization.

Why the full picture is hard to assemble

Risk signals sit across financial systems, policies, agreements, Local Files, benchmarks, prior audits and knowledge held by local teams and advisers. Connecting those signals into a reliable view of exposure is harder when the underlying data is spread across multiple systems. Only 15% of surveyed teams use a single ERP or financial reporting system, while 46% use four or more. Some 79% spend more than a tenth of their capacity on data wrangling.

The deeper difficulty is understanding value creation. "The biggest challenge is how you develop a coherent, comprehensive and accurate understanding of where value is being created around the world within your organization, and which entities are entitled to it," Katheryn says. In groups that have grown through acquisitions, IP rights may be scattered across jurisdictions. Decisions are often made by cross-functional and cross-jurisdictional committees. A narrative describing one entity controlling everything may not reflect reality.

Context also determines what a finding means. Some differences reflect genuine local circumstances; others reveal misalignment. Teams need to understand the distinction, document the rationale and address contradictions that cannot be supported.

Quantifying exposure helps turn insight into action

Experienced transfer pricing managers often know where the weaknesses are. "They probably haven't done something because they don't have the capacity, the time, full picture or the necessary expertise to nail down that risk and quantify it," Prasad says. For someone newly appointed, discovering inherited risks may be equally important.

A quantified exposure helps leadership assess remediation options, consider any financial reporting implications and allocate resources. Estimates should make their assumptions and uncertainty explicit, rather than imply a precision the evidence cannot support.  

For example, start by assessing whether the mark-up a limited-risk service provider earns on its costs is reasonable. Then estimate the potential tax impact if a tax authority challenges it, taking into account the taxpayer’s likely settlement position and willingness to seek relief through the Competent Authority process or other available routes. But focusing solely on a mark-up percentage may miss a larger exposures risk. As Katheryn explains, an inappropriate cost base, outdated entity characterization or overlooked entitlement to non-routine IP returns can put much bigger amounts at risk.

You won't fix everything, so choose deliberately

"There's not a single in-house tax team, no matter how well-resourced, that is going to be able to address 100% of risks in any given year," Katheryn says.

Prioritization should weigh potential financial impact, the strength of the position and relevant enforcement trends, alongside the team's capacity to act. For example, where non-routine IP contributes significantly to an organization’s profitability, its ownership and the entities' entitlement to returns – and the underlying evidence supporting any narrative - are key areas to assess.  

Continuous assessment can also uncover opportunities. Prasad frames it as "risk and opportunities": identifying tax optimization opportunities, unnecessary cash movements, potential foreign exchange impact or withholding tax costs, or a supply chain that could work better for both business and tax. Investigating these possibilities helps position tax as a partner in decisions, not simply a source of problems or risk manager.

What a modern transfer pricing health check must deliver

A useful health check should help teams understand their position, investigate potential risks and decide what to do next. Five requirements underpin that approach.

• One connected view. Policies, agreements, Local Files, benchmarks and prior years should form a coherent picture of the group's entities, transactions and arrangements, not another repository of disconnected files.

• Checks grounded in transfer pricing expertise. The assessment should examine what inconsistencies mean for the position, including functional analysis, allocation of risks and treatment of intangibles. Findings should support prioritization, with remedy options and exposure estimates where the evidence allows.

• Evidence behind every finding. Each flag should link to its source and the check that produced it, so reviewers can test the reasoning and assumptions.

• Clear boundaries around what is known. Incomplete information must not produce a false all-clear. Outputs should distinguish supported findings from unresolved questions and identify the facts requiring confirmation, even when teams use different terminology for the same arrangement.

• Continuous repeatable assessment. The same documents and checks should produce consistent findings. New information should allow reassessment without rebuilding the entire context.

Technology widens the view, experts make the call

Technology can help teams stress-test their own account of the business. "It may make sense to you because you wrote the fact pattern," Katheryn says. "But is it going to make sense to an objective third party?"

Choosing what to do still requires organizational context. As Katheryn puts it, "No system is going to magically know the entire organization's priorities and resourcing constraints." Understanding how decisions are really made also requires conversations with the business. Technology should give professionals more time and better context for that work; the team owns the conclusions.

Where TP Intelligence starts

Aibidia Health Check is the first use case of TP Intelligence, the System of Intelligence for Global Transfer Pricing. It connects scattered transfer pricing documents into a Digital TP Twin of the group's position and applies TP-specific checks to surface potential risks and inconsistencies, with remedy options and exposure estimates where supported.

Every finding links to its source and the check behind it. Experts review the evidence and own the conclusions. It is a connected starting point for investigation, not a substitute for understanding operational reality.

The strongest audit defense starts before the audit, with a clear understanding of the position, the evidence behind it and the decisions that need attention.

Explore TP Intelligence Health Check in a guided demo.

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