A Conceptual Risk Assessment Model for Transfer Pricing in Multinational Corporations

• Author(s): Oluwaremi Ayoka Lawal; Titilayo Elizabeth Oduleye
• Paper ID: 1713360
• Page: 587-601
• Published Date: 30-06-2019
• Published In: Iconic Research And Engineering Journals
• Publisher: IRE Journals
• e-ISSN: 2456-8880
• Volume/Issue: Volume 2 Issue 12 June-2019

Abstract

Transfer pricing represents one of the most significant tax and financial risk areas faced by multinational corporations (MNCs), as it directly influences profit allocation across jurisdictions and compliance with global regulatory frameworks. This review introduces a conceptual risk assessment model that integrates quantitative and qualitative dimensions to evaluate transfer pricing risks holistically. The paper explores critical variables such as intercompany transaction complexity, jurisdictional tax disparities, intangible asset valuation, and the degree of alignment with the OECD Transfer Pricing Guidelines. It also highlights the interplay between risk governance structures, compliance analytics, and strategic financial planning in mitigating exposure to regulatory audits and penalties. The model proposed emphasizes a multi-layered framework combining probabilistic assessment, scenario simulation, and sensitivity analysis to capture uncertainty in pricing decisions and cross-border operations. By synthesizing insights from international tax law, financial management, and enterprise risk theory, this conceptual model aims to assist policymakers, auditors, and corporate executives in developing a structured mechanism for identifying, quantifying, and mitigating transfer pricing risks. The study concludes by underscoring the necessity for continuous monitoring, adaptive compliance mechanisms, and integration of AI-driven risk intelligence tools to enhance transparency and accountability in multinational transfer pricing strategies.

Keywords

Transfer Pricing, Multinational Corporations, Risk Assessment, OECD Guidelines, Tax Compliance, Financial Governance

Citations

IRE Journals:
Oluwaremi Ayoka Lawal, Titilayo Elizabeth Oduleye "A Conceptual Risk Assessment Model for Transfer Pricing in Multinational Corporations" Iconic Research And Engineering Journals Volume 2 Issue 12 2019 Page 587-601

IEEE:
Oluwaremi Ayoka Lawal, Titilayo Elizabeth Oduleye "A Conceptual Risk Assessment Model for Transfer Pricing in Multinational Corporations" Iconic Research And Engineering Journals, 2(12)