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Abstract
The new regulatory environment including the diversity of approach has to be recognized in planning transfer pricing policies and in determining the strategy to be followed in preparing for transfer pricing audits. The results of a survey by Ernst & Young show that transfer pricing audits are to be seen as a central feature of the tax risk environment. The most frequently audited transactions involve tangible goods although there are signs of services and intangibles transactions attracting increasing attention. In recognition of the increasingly complex transfer pricing risk environment facing multinationals, this year's survey examined the adoption of the main strategies available to manage that risk. Just under half of the parent respondents to the survey reported having undertaken a risk assessment of their transfer pricing policy in light of recent tax authority activity. But it appears that many multinationals have concluded that good documentation is necessary in order to contain risk.