In recent years, the global financial and economic environment has contributed to the need for governments to develop and operate competitive tax systems. A mixture of headline rates and specific incentives is increasingly used to attract multinational businesses. At the same time, there has been a focus on widening the corporate tax base, as well as increasing enforcement provisions to ensure compliance. Transfer pricing principles are important in allowing targeted measures to be introduced to increase competitiveness (as testified by recent UK and wider European changes), as well as in tax authorities’ protection of a broad national tax base.
