The rise of artificial intelligence (AI) tools forces us to reexamine fundamental transfer pricing questions: Where is the value being created and how should profits be allocated in a world in which significant people functions are becoming “less human”? In “The Impact of AI Tools on Transfer Pricing and Value Creation,” Managing Director Vladimir Starkov, Director Tom Braukmann, and Consultants Catarina Branco and Alexis Jin focus on addressing the practical question: How should the arm’s length principle be applied to controlled transactions that involve the development and use of AI tools by multinational enterprises (MNEs)?
The focus of this article is on MNEs that deploy AI to make their existing value chains more efficient, rather than on MNEs whose business is to develop or monetize the AI itself. The authors also explore how the evolving value chains can be analyzed to incorporate arm’s length remuneration for AI development and funding. Special emphasis is placed on the risk control function of AI investments, recognizing that while many such investments are expected to yield returns, some inevitably will not. This uncertainty makes the accurate attribution of these investments even more critical than in other cases involving the funding of intangibles.
Published by Transfer Pricing Internation (TPI): https://shop.lindeverlag.at/zeitschrift/tpi-18
