Import Tariffs Threaten to Disrupt Corporate Tax Positions

Import tariffs promised by President-elect Donald Trump threaten to upend companies’ transfer pricing by complicating the way they value transactions between corporate units and allocate costs of the tariffs.

Attributing new tariffs to costs and profits can be a minefield for companies, raising the possibility of more disputes with global tax authorities, tax practitioners said.

Disagreements could arise if companies reallocate the cost burden to related parties in the supply chain in a way that tax auditors say shifts profits out of countries where they rightfully belong, practitioners said. Recent years have seen tax authorities get tougher on audits. ...