INTRODUCTION Contributed by: Paolo Ludovici, Marlinda Gianfrate, Luca Tortorella and Angelica Masciulli, Gatti Pavesi Bianchi Ludovici
Global Overview of Transfer Pricing in 2025 International organisations and institutions have continued their efforts to standardise, harmonise and simplify transfer pricing principles and com - pliance. These developments have been seen in individual jurisdictions around the world. In general terms, however, the recent trade policy of the new US administration – with the introduc - tion of new tariffs on a case-by-case basis – is expected to have significant effects on global value chains and transfer pricing policies. This is in addition to the decision to withdraw from the Two-Pillar solution addressing tax chal - lenges (see below for more details). As a result, the coming year is expected to bring substantial changes in transfer pricing, requiring businesses to stay vigilant and adapt accordingly. OECD Level The implementation of the Two-Pillar solution, the OECD/G20 project to address tax issues related to the globalisation of the digital econ - omy, has implications for how multinational groups apply transfer pricing rules. Although some aspects of both Pillars may reduce the importance of the arm’s length prin - ciple (Pillar One, Amount A), other components (Pillar One, Amount B) increase the importance of the arm’s length standard. The OECD global agreement on the taxation of multinational enterprises (MNEs) was signed in October 2021 after years of negotiations by all members of the Inclusive Framework (currently 145 jurisdictions), and Pillar Two has already been implemented in several countries world - wide (where South Korea was the first country to sign the global minimum tax rules into law) and within the EU. It provided for a minimum 15% tax rate for large international corporations (Pil - lar Two) and a profit reallocation mechanism for
the most profitable companies, especially digital giants (Pillar One), to ensure that the allocation of taxing rights by countries where customers are located to part of the business profits of large MNEs no longer requires physical presence in a jurisdiction. However, this fundamental inter - national tax reform has been undermined by the recent decision to reject the “global tax deal” (the OECD global agreement on the taxation of MNEs) by the United States. With the White House memorandum of 20 January 2025, Pres - ident Trump announced the withdrawal of the United States from the global tax deal. Although the USA helped shape Pillar Two, it never ratified it. The new document signed by President Trump goes a step further: it declares null and void the commitments made by the pre - vious United States administration and orders the Secretary of the Treasury to “investigate whether any foreign countries are not in compli - ance with any tax treaty with the United States or have any tax rules in place, or are likely to put tax rules in place, that are extraterritorial or disproportionately affect American companies”. The US executive orders may also affect the adoption of the simplified and streamlined approach under Pillar One Amount B. Amount B simplifies the application of transfer pricing for baseline marketing and distribution activi - ties. The final report recommends a streamlined approach for applying the most appropriate transfer pricing method to identify a fixed return to remunerate in-scope transactions involving baseline marketing distributors, such as whole - salers, sales agents and commissionaires for certain marketing and distribution activities. The report was incorporated into the OECD’s Trans - fer Pricing Guidelines for Multinational Enterpris - es and Tax Administrations (the “Transfer Pric - ing Guidelines”), and jurisdictions are deciding
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