New York (Nov. 7, 2003) -- Transfer pricing is the most important international tax issue encountered by multinational corporations, according to a survey by Big Four firm Ernst & Young.

Some 86 percent of parent companies or multinational entities and 93 percent of subsidiaries responding to E&Y’s Transfer Pricing 2003 Global Survey identified transfer pricing as the most important international tax matter they are currently dealing with. Those surveyed also indicated that audits by tax authorities are becoming a rule, rather than an exception.

Transfer pricing involves the price at which transactions between units of multinational companies take place, including the inter-company transfer of goods, property, services, loans and leases.

The E&Y poll revealed that 59 percent of all MNEs with revenues of

at least U.S.$5 billion, and 71 percent of all U.S.-based MNEs regardless of revenues, had been subject to a transfer-pricing audit since 1999. Seventy-six percent of all company respondents told Ernst & Young that they believed that a transfer pricing examination will occur within their group during the next two years.”

Conducted by an independent research firm, the E&Y transfer pricing survey, polled 641 multinational parent companies and 200 subsidiary corporations in 22 countries.

-- WebCPA staff

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