Transfer pricing implications of Covid-19

Businesses are currently faced with significant supply chain disruptions fluctuations in demand and numerous other problems that were hardly imaginable a few months ago. As a consequence they are undertaking various measures with third parties; for example seeking to renegotiate contracts defer payments and renegotiate financing. Given that transfer pricing is based upon comparability with the terms of transactions with independent parties (the arm’s length principle) there may be a case for adapting or changing transfer pricing polices too.

It is important to recognise that transfer pricing responses to the current economic environment are likely to evolve. Many organisations are currently in survival mode having put appropriate strategies in place to...