Transfer Pricing Controversy

What are Transfer Pricing disputes and how can they be resolved or prevented?

Hear from our experts on what transfer pricing controversy is, and what you need to know

It is widely acknowledged that disputes arise as to the correct amount of tax payable in an area such as transfer pricing. Transfer pricing disputes – referred to as enquiries or audits – arise between tax authorities and businesses and involve tax authorities checking the ‘arm’s length’ nature of the transfer pricing applied between the different entities/permanent establishments of a multinational business.

The enquiry process involves tax authorities gathering information in order to determine whether the transfer pricing applied results in the local entity earning an ‘arm’s length’ amount of profits. In the enquiry, if a business cannot successfully defend their pricing, this can lead to transfer pricing adjustments which increase the amount of profits taxed in that country – resulting in double taxation, if those profits have been taxed elsewhere.

The resolution of double taxation disputes forms a large part of transfer pricing controversy. This includes eliminating double tax resulting from adjustments made as a result of an audit or enquiry by using Mutual Agreement Procedures (MAPs). MAPs can involve binding transfer pricing arbitration if the tax administrations in the relevant countries cannot reach agreement. Transfer pricing controversy also includes preventing double tax arising by seeking up front agreement with tax authorities through Advance Pricing Agreements (APAs).

Deloitte Transfer Pricing Controversy Services

Our global transfer pricing team includes individuals with a range of skills and experience, including economists and former tax administration employees. Our team are well-versed in helping clients navigate transfer pricing controversy, by:

  • Supporting you with tax administration risk assessments and enquiries.
  • Supporting you with transfer pricing disclosures, including under HMRC’s Profit Diversion Compliance Facility (PDCF) in the UK.
  • Resolving double tax issues through MAPs.
  • Preventing double tax arising through APAs.

Transfer pricing controversy experience is an integral part of the Deloitte transfer pricing service delivery whether in relation to preventing disputes from arising or resolving them.

The image below provides an overview of how our transfer pricing specialists can offer strategic advice and tactical support across the the transfer pricing controversy lifecycle. Below the image, we provide a short video series where some of our team expand on some specific areas of transfer pricing controversy.

Should you like to discuss anything in further detail, please do get in touch.

Transfer pricing controversy lifecycle

What is transfer pricing controversy?

What is transfer pricing controversy? Eddie Morris, Tax Partner, discusses transfer pricing controversy and how it isn’t as controversial as you might think.

Using Advance Pricing Agreements (APAs) to avoid transfer pricing disputes

What is an Advance Pricing Agreement (APA)? And how can they be used to prevent transfer pricing disputes?

Using Mutual Agreement Procedures (MAPs) to resolve double taxation

How can Mutual Agreement Procedures (MAPs) be used to resolve double taxation? Rochelle Baptiste, Tax Consultant, discusses this in our latest Transfer Pricing Controversy video.

Profit Diversion Compliance Facility

The Profit Diversion Compliance Facility (PDCF) was launched by HMRC in early 2019. In a PDCF, the business effectively conducts their own investigation into transfer pricing disputes.

The International Compliance Assurance Programme

Want to know more about the International Compliance Assurance Programme (ICAP), and simultaneous and joint audits?

Frequently asked questions

1. What is an Advance Pricing Agreement (APA)?

An Advance Pricing Agreement (APA) is an upfront agreement on transfer pricing arrangements where one or more tax administration is involved. Having an APA means disputes are prevented from arising. They are often used for complex transactions which are inherently more uncertain.

Some countries permit rollback, where the consideration of past years is allowed as part of the process.

For further information please see our video above.

2. What is a Mutual Agreement Procedure (MAP)?

Mutual Agreement Procedures (MAPs) are used to resolve double tax issues that arise from a transfer pricing adjustment. Applications are submitted to the relevant tax authorities that request resolution of the double tax, either through a treaty or an EU directive.

For further information on MAPs please see the OECD’s website and our video above.

3. What is the Profit Diversion Compliance Facility (PDCF)?

The Profit Diversion Compliance Facility, or PDCF programme, is an initiative launched in 2019 by HMRC, the UK tax administration. In a PDCF, the business effectively conducts their own investigation and summarises the facts and conclusions for HMRC. These are subsequently discussed and any tax adjustments agreed.

For further information on PDCFs please see HMRC’s website and our video above.

4. What is the International Compliance Assurance Programme (ICAP)?

The OECD International Compliance Assurance Programme, or ICAP, is a voluntary risk assessment programme that targets non-high-risk groups with a multilateral cooperative risk assessment between businesses and tax authorities. The purpose of ICAP is to have an efficient, effective, and coordinated approach in an open matter, creating more transparency concerning transfer pricing and related issues.

For futher information on ICAPs please see OECD’s website and our video above.

5. How is double tax eliminated?

Where there has been a transfer pricing adjustment, double tax may arise. Mutual Agreement Procedures (MAPs) are a way to resolve double tax. Somes binding arbitration is required where the tax authorities involved cannot reach agreement. See ‘What is a Mutual Agreement Procedure (MAP)’ for further information.

6. What is Diverted Profits Tax (DPT)?

Diverted Profits Tax (DPT) is targeted at companies who use arrangements to try to reduce their tax liabilities in the UK. It is not targeted specifically at any particular sectors or companies, but rather at particular behaviours and arrangements.

Further information can be found on HMRC’s website.


Eddie Morris

Eddie Morris


Eddie served for 12 years at HMRC’s International Head Office on transfer pricing controversy cases before joining Deloitte. As well as interacting with HMRC at a policy level, he helps clients with c... More

Jen Breeze

Jen Breeze


Jennifer is a Partner in Deloitte’s transfer pricing team based in London, with over fifteen years of experience specialising in transfer pricing. Jennifer advises clients across the full spectrum of ... More

Andrew Skipsey

Andrew Skipsey


  Andrew is a Director in the FTSE Transfer Pricing team based in London. He advises clients on appropriate transfer pricing policies, supporting documentation and dealing with tax administration chal... More

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Jamie Bedford

Jamie Bedford


Jamie is a Director in the Foreign Owned Transfer Pricing team based in London. He specialises in Transfer Pricing and International Tax disputes and he leads Deloitte’s response to HMRC’s Profit Dive... More

Iain Whittle

Iain Whittle


Iain is a transfer pricing director in the UK focusing on tax controversy and in particular, HMRC audits, advanced pricing agreements (APA) and mutual agreement procedure (MAP). Iain joined Deloitte i... More