Kluwer International Tax Law

White Paper:
Transfer Pricing and Covid-19

The Covid-19 pandemic has generated unprecedented consequences on the world global economy. In 2020, the pandemic brought most countries into recession, with per capita income significantly shrinking and public debt skyrocketing. Most probably, the real impact of the pandemic on the global economy will be known only in the long-term future.

Under this catastrophic scenario, numerous companies will soon have to report unprecedented losses into their financial statements, reduce their expenditures on key assets such as employees and R&D, and, in certain cases, even close their businesses. For some others, Covid-19 has represented a boost to their businesses, as well as an opportunity to restructure their global supply chains and increase the digitalization of their activities. 

Transfer pricing topics will be greatly impacted by the Covid-19 economic crisis, both in the short term and, most notably, in the long term. The OECD, as well as various tax administrations around the world, have already provided relevant guidance on issues related to the comparability analysis, the allocation of losses, the impact of government assistance programs, and Advance Pricing Agreements. However, the effects of the Covid-19 crisis on transfer pricing topics are more far reaching, concerning the entire arm’s length analysis, starting from the accurate delineation and recognition of the actual transactions, to the selection and application of the most appropriate transfer pricing methods. These effects will not only concern general transfer pricing issues, but also specific intra-group transactions, such as services, financing, intangibles and business restructurings.

This white paper provides a preliminary analysis of these topics, highlighting the related key issues as well as possible solutions. The first section will focus on transfer pricing issues related to the comparability analysis, while the other three sections will explore considerations specifically referring to financing, intangibles and business restructurings.

The contributions have been drafted by renowned transfer pricing practitioners, who have relevant experience dealing with all these issues in their daily practice. However, the views of the authors do not represent the views of their employers. Moreover, this white paper is not a substitute for detailed transfer pricing advice; however, the authors can be contacted directly if readers have specific questions or concerns. 

The white paper is downloadable for free after filling up the form on the right.

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