COVID-19 and Transfer Pricing Implications for Digital Companies

The ongoing pandemic has caused a dramatic shift in consumer spending to online channels, not just for shopping but also in the use of remote and digital tools such as online banking, video conferencing, remote education, video calls, online gaming, internet entertainment, to name but a few.

The Organization for Economic Cooperation and Development (OECD) is working on a plan to best tax the digital economy. This article describes the OECD’s approach to taxing the digital economy, the unique transfer pricing challenges faced by digital companies, and what multinational enterprises could consider in the interim until the OCED recommendations are finalized and generally accepted. In the interim, many countries have taken unilateral measures (e.g., digital services taxes or DST) that might result in double taxation for some companies.

This is an extract from Bloomberg Tax, first published September 21, 2020. The whole publication is available at https://news.bloombergtax.com/daily-tax-report/insight-covid-19-and-transfer-pricing-implications-for-digital-companies

“The Covid-19 crisis has, among other things, caused a rapid shift in consumer spending to online channels. Since the start of the pandemic, our use of remote and digital tools has become thoroughly integrated into our everyday life: online banking, video conferencing, remote education, video calls, online gaming, internet entertainment, to name but a few. This dramatic increase in digital services presents unique transfer pricing challenges that multinational entities (MNEs) should consider while planning to expand.”