Trading Carbon Credits Globally Creates Corporate Tax Challenges

Corporations are increasingly turning to tax lawyers to help manage intercompany pricing transactions involving the buying and selling of carbon credits.

The credits lack regulation and much market history, posing a challenge for applying transfer pricing laws, attorneys and consultants said.

“We still don’t know what tax authorities want us to show them to prove that we are compliant,” Thais Rodrigues, partner at Mattos Filho in Rio de Janeiro, said in an interview.

The lack of clear definitions for credits under tax laws negatively affects companies’ ability to know if they have proper transfer prices, according to Jessie Coleman, ...