Over half of multinationals exposed to transfer pricing lack a documented policy
Baker Tilly’s Transfer Pricing Readiness Assessment, covering companies in Europe and Latin America, finds that governance choices, not size, sector or geography, separate prepared companies from exposed ones.
Transfer pricing exposure is almost universal among multinational groups, but most are not prepared for it, according to the Transfer Pricing Readiness Assessment, a study by Baker Tilly tax experts based in Mexico, Portugal and Spain of companies with cross-border intragroup transactions in Europe and Latin America.
Nearly all respondents (94% in Europe, 93% in Latin America) confirm they are exposed to transfer pricing rules. Even so, more than half have no documented transfer pricing policy (53% in Europe, 56% in Latin America). Typically, that is the first document a tax inspector would ask to see in any jurisdiction.
Confidence is not compliance
The study scored each company from 0 to 100 on a Transfer Pricing Awareness Index built from seven pillars: knowledge, documentation, intragroup practices, internal resources, risk controls, evidence retention and awareness of APA/MAP mechanisms. The average score was 58.9 in Europe and 54.2 in Latin America. About one in three companies falls in the lowest awareness tier.
Self-assessment proved a poor guide to how well companies actually manage transfer pricing. How much companies believe they know about transfer pricing is only weakly linked to what they actually have in place (correlation of 0.15 in Europe and 0.17 in Latin America).
Feeling at risk does not mean being prepared
“Transfer pricing exposure is now the rule, not the exception, yet most companies still can’t produce a documented policy to prove it,” said João Aranha, transfer pricing partner at Baker Tilly in Portugal.
Three choices make the difference
Awareness levels did not differ in any meaningful way by region, sector or company size. What separated companies was in three areas.
A documented transfer pricing policy: more than half have no documented transfer pricing policy (53% in Europe, 56% in Latin America).
Dedicated internal transfer pricing resources: Only 39% of European companies have them and 42% in Latin America.
Do not know if they can access transfer pricing audit: 33% European companies and 29% of Latin American.
Advice is outsourced, but the expertise stays outside
Almost nine in ten companies rely on external advisers for transfer pricing (87% in Europe, 89% in Latin America), but fewer than half have specialised in-house resources (39% and 42%). The study also found that occasional use of advisers does little to raise awareness. Only sustained, recurring engagement is linked to meaningfully higher-quality results.
“Acting early always costs less than fixing it under audit. The best-prepared companies are simply the ones that decided to take the initiative before the inspector did,” said María Mariñas, international tax partner at Baker Tilly in Spain.
“We strive to build closer relationships with our customers and better understand their transfer pricing needs. Creating synergies.” said Agustin Vergara, transfer pricing partner at Baker Tilly in Mexico.
Recommendations
Baker Tilly recommends the following for companies.
In the short term: formalise transfer pricing policy, validate documentation (local file, master file and CbCR), and test existing intragroup transactions against that policy.
In the medium term: strengthen how evidence is retained, build internal capability, and prepare in advance for a possible audit.
The study includes an eight-question readiness checklist that companies can use as a starting point.
About the study
The Transfer Pricing Readiness Assessment (September 2026) surveyed companies with subsidiaries in several countries and cross-border intragroup transactions. The companies came from two independent samples covering a range of sectors: one in Europe and one in Latin America.
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