Digitalization of Traditional Business Models: Transfer Pricing Implications of Business Restructurings

This article recognizes the need for augmenting the application of arm’s length analysis in light of digitalization of business models and recent litigation surrounding business restructurings. The author recommends the integration of digital themes in undertaking function, asset and risk (FAR) analyses and suggests modifications to conventional entity characterizations. The author also proposes and discusses the implementation of a “digital intensity test” to improve comparability analysis.