Transfer pricing methods in multinational enterprises - Identifying challenges to determine the arm’s length price

Based on the court case analysis and expert interviews, we identify the key challenges in implementing international transfer price regulation in Norway, which relate to difficulties with the interpretation and application of the statutory wording in section 13-1 (1) of the tax act (Tax act, 1999, section13-1). We make the following observations: A fundamental issue is if the tax office can disclose contracts used to compare transfer prices when determining the arm’s length price or confidentiality restrictions prevail. Transactions used in the comparison cannot be completely comparable, the problem resides in lack of discretionary additional information on levels, industries, and risks. Necessary calculations, tax assessment and valuation cannot be made by using only database dumps and mathematical models. Disagreement on certain factors occurs considered when determining and application of the arm’s length range