Transfer pricing is not a new concept. In fact, it dates back to the 1960s, when the US tax authorities issued the first comprehensive transfer pricing legislation. The practice of transfer pricing has evolved over time with changing business models, increased global competition and pressure on corporate tax rates.
The Golden Age of transfer pricing started in the 2010s with the rise of global supply chains and increased awareness of tax avoidance risks. The Base Erosion and Profit Shifting OECD project was the tipping point, which introduced standardized transfer pricing reporting requirements now implemented in more than 150 countries around the world.
Despite fundamental changes in the business models and compliance requirements, the way multinationals handled the transfer pricing did not change that much. Still, most companies focus on the mere compliance and reactive handling of tax authorities' requests. Transfer pricing specialists primarily use Excel, Word and emails to handle the documentation, as they have done since the late 1990s.