The international tax system faces substantial challenges with respect to taxing the profits of multinational companies in the digital economy. Both policymakers and taxpayers consider the determination of intra-company transfer prices the most pressing issue. This article analyses existing transfer pricing challenges for digital businesses and supplements the analysis with descriptive insights on practical challenges from a survey among practitioners at multinational companies. Considering the survey insights, the authors discuss current transfer pricing developments in the BEPS 2.0 Project and assess whether they address existing challenges. They document that transfer pricing for digitalized transactions is an increasingly relevant issue, also for companies with traditional business models. They also find that recent reforms targeting profit shifting activities has increased legal uncertainty. Further, they argue that the tendency towards the formulaic apportionment of profits under current policy discussions about the new allocation of taxing rights has the potential to overcome this problem; however, its integration in the existing transfer pricing framework will create complex delineation issues.