Since the initiation of the OECD Base Erosion and Profit Shifting (BEPS) Project in 2013, the utilization of the profit split method by multinational enterprises (MNEs) has significantly increased. At the same time, MNEs face numerous challenges in the practical implementation of this method into their transfer pricing systems and the increased scrutiny during tax audits.

In Nataliia Guzenko’s article “Recent Case Law on the Application of the Profit Split Method” published in IBFD International Transfer Pricing Journal, she discusses the increased use of the profit split method by MNEs and how tax authorities challenge various aspects of its application during tax audits. Drawing on dedicated surveys and several case law examples, the article provides insights on the actual application of the profit split method, which can greatly diverge from one MNE to another, and what to expect in the future.