Transfer pricing disputes are increasingly resolved in the courts, and recent decisions offer practical lessons for both taxpayers and tax authorities. While each case turns on its own facts, several themes recur across jurisdictions.
Substance over form
Courts continue to look closely at whether the conduct of the parties matches their contracts. Where the people who manage and control risk sit in a different entity from the one that contractually bears it, tribunals have been willing to re-characterise the arrangement.
The quality of comparables
Benchmarking remains a frequent battleground. Decisions have turned on comparability adjustments, the choice of tested party, and whether loss-making comparables were properly included or excluded.
- Document the rationale for every comparable accepted or rejected.
- Be consistent between the policy applied and the policy documented.
- Test the result against the commercial reality of the business.
Practical takeaways
The cases reinforce a simple message: a transfer pricing position is only as strong as the evidence behind it, and that evidence must be assembled before a dispute begins.
“By the time a case reaches a tribunal, the outcome usually depends on documentation that was written years earlier.”
How TPTAX can help
We provide research, training and limited scope advisory support on transfer pricing audits and dispute resolution across Africa and the Middle East (GCC countries). Get in touch to discuss your group's position.