What are the key unique challenges of managing transfer pricing in Asia?

What are the key unique challenges of managing transfer pricing in Asia?

What makes the Asia region unique?

The most pressing transfer pricing issue in Asia can vary depending on the country. However, based on our experience from talking with different organisations across various industries, some of the common transfer pricing challenges  faced by companies in the region include:

1. Lack of local/regional comparable data as most of the times data is either USA/Europe centric due to the different reporting requirements in these regions. In Asia we tend to keep information more private and have less reporting requirements. Also there are less research organisations and agencies publishing data.
2. Lack of consistency in the transfer pricing laws across countries
3. Lack of consistency in the approach and interpretation by tax authorities
4. Different languages that makes is difficult to prepare good governance documents e.g. transfer pricing policies or documentation in one language within the organisation.
5. Deficiencies in multilateral dispute resolution mechanism that make the options available very costly in terms of resources and time for the taxpayer.
6. Fast changing economy that makes current tax and transfer pricing rules to some extend outdated.