Annual Survey of International & Comparative Law


This paper will provide a brief history of the problems which transfer pricing issues have caused for both international companies and taxing jurisdictions. It will also examine efforts by the United States tax system to remedy this two-sided problem. The United States has primarily attempted to deal with the problem from its fiscal perspective, the underpayment of United States income tax by foreign companies through transfer pricing abuse. The double taxation problem for taxpayers has an effective, albeit cumbersome, solution in the competent authority process. However, the very fact that double taxation problems still exist, suggests the need for more effective dispute resolution methods between the taxing jurisdictions and the related taxpayers, whether it be the existing competent authority procedure or new methods. Potential long term solutions to these transfer pricing problems will also be examined.