Near-shoring and friend-shoring strategies are reshaping global operating models as groups seek to reduce exposure to geopolitical risk. While commercially necessary, these restructures often trigger significant transfer pricing consequences, including exit taxes on migrated functions, assets or intangibles, re-characterisation risk for legacy entities, and the creation of new intercompany transactions requiring fresh pricing and benchmarking. Exit tax exposures are frequently underestimated and can outweigh expected tariff or resilience benefits if not carefully managed.

Disrupted trade routes, energy market volatility and sustained freight inflation have altered cost bases across many industries. Tax authorities are increasingly challenging which entity should bear these costs at arm’s length, particularly where limited-risk distributors or contract manufacturers report sustained margin compression or losses. Assertions that costs are ‘extraordinary’ are now tested against actual conduct, contractual terms and decision-making evidence.

Geopolitical instability has driven interest rate volatility, currency risk and restricted access to third-party funding. As groups rely more heavily on intra-group financing, tax authorities are intensifying scrutiny of interest rates, debt quantum, guarantee fees and implicit support arguments. Historic benchmarks are often insufficient in volatile conditions, increasing the importance of contemporaneous market evidence and robust financing frameworks.

The introduction of the 15 percent global minimum tax under OECD Pillar Two has materially increased the stakes of transfer pricing accuracy. Understated margins in one jurisdiction can now trigger top-up taxes elsewhere in the group. Inconsistencies between transfer pricing documentation and Pillar Two information returns are increasingly visible to tax authorities and are expected to become a key audit risk area from 2026 onwards.

Tax authorities are moving beyond traditional documentation reviews toward forensic, data-driven audits. Increasingly, audits examine internal emails, decision logs and operational behaviour to test whether profits align with real risk control and value creation. Across Australia, Europe and Southeast Asia, transfer pricing must now withstand cross-checking against customs data, indirect taxes, payroll information and Pillar Two filings.

Leading multinational groups are responding by adopting dynamic benchmarking, price adjustment mechanisms and scenario modelling to stress-test transfer pricing outcomes against plausible geopolitical shocks. Greater integration between tax, finance, supply chain and treasury functions is becoming essential to ensure consistent messaging and defensible outcomes.