Transfer Pricing Challenges in the Digital Economy - Part 1 : Hic Sunt Dracones?

"There may be dragons" in the OECD's BEPS project, which mandated that transfer pricing outcomes under the arm's­ length standard should be aligned with value creation. In the digital economy, new business models are challenging transfer pricing practitioners on how best to apply the value creation approach. In a two-part series Lorraine Eden of Texas A&M and Niraja Srinivasan and Srini Lalapet of Dell Technologies illustrate the complexity of digital business models and the challenges they create for conducting transfer pricing analysis. Part 1 explores the digital economy and the OECD's work on BEPS Action Item 1 (taxing in the digital economy). Part 2 is a case study of the Internet of Things (loT}, which builds and uses a stylized transfer pricing analysis to explore the transfer pricing challenges posed by an loT ecosystem