Transfer pricing exposure is almost universal among multinational groups, but preparedness remains inconsistent.
A new Baker Tilly Transfer Pricing Readiness Assessment, surveying companies in Europe and Latin America, finds that while more than nine in ten businesses face transfer pricing rules, most lack a documented policy to demonstrate how they manage their obligations.
Although 94% of European respondents and 93% of Latin American respondents confirmed their exposure to transfer rules, 53% and 56%, respectively, had no documented transfer pricing policy.
This leaves many businesses without a fundamental governance document that tax authorities may request during an audit.
Confidence is not compliance
The assessment measured readiness through a Trancing Pricing Awareness Index, scoring companies from 0 to 100 across 7 areas, including knowledge, documentation, intragroup practices, internal resources, risk controls and evidence retention.
Average scores reached just 58.9 in Europe and 54.2 in Latin America, with approximately one-third of companies falling into the lowest awareness tier. Self-assessed knowledge was also only weakly correlated with actual readiness, with correlations of 0.15 in Europe and 0.17 in Latin America.
In other words, confidence is a poor substitute for preparation.
Companies may understand their obligations in principle while lacking the policies, documentation and controls needed to demonstrate compliance.
Governance, not geography, drives readiness
The study found no meaningful differences in awareness by region, sector or company size. Instead, three governance choices distinguished better-prepared businesses.
Companies with a documented transfer pricing policy achieved an average awareness score of 76, compared with 39 among those without one. Businesses with dedicated internal transfer pricing resources scored 77, against 43 for those without them. Companies with previous transfer pricing audit experience scored 76, compared with 51 among those without it.
These findings suggest that readiness depends less on a company's size or location than on the structures it puts in place. Documented policies, specialist expertise and audit experience help businesses move from recognising risk to actively managing it.
Outsourced advice needs in-house ownership
External advisers play a central role, with 87% of European respondents and 89% of Latin American respondents relying on external support. Yet only 39% and 42%, respectively, had specialised internal resources.
The study found that occasional engagement with advisers did little to improve awareness. Sustained, recurring support was associated with greater maturity.
Preparation starts before the audit
The real test of transfer pricing readiness is not whether businesses recognise the risk, but whether they can demonstrate how they manage it.
Clear policies, reliable documentation and internal expertise are essential to turning awareness into effective risk management – and ensuring preparation begins long before an audit.
About the study: Published in September 2026, the assessment surveyed companies with international subsidiaries and cross-border intragroup transactions in Europe and Latin America.
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