Is Adoption of Generative Artificial Intelligence (GenAI) Redefining Value and Transfer Pricing? ...

Why It Matters

How firms assign ownership, costs and profits for GenAI can materially shift tax liabilities and profit allocation across jurisdictions and increase audit risk, making early contractual and tax-structuring choices strategically and financially significant.

Summary

KPMG transfer-pricing specialists say generative AI is reshaping multinational value chains by creating new forms of intellectual property and changing which entities contribute and capture value. Key issues include identifying who develops and owns AI-generated IP (including training data and models), structuring intercompany agreements and funding, and reassessing allocation keys—such as moving beyond headcount—for service charges and IP-related expenses. Panelists stressed existing transfer-pricing principles still apply but will require careful application around control, exploitation rights, and the life-cycle of AI-enabled assets. Tax authorities are already testing approaches, so companies must proactively document development, funding and exploitation decisions.

Original Description

The rise of GenAI is not just an innovation in technology, it's a gamechanger for global business strategies. In this episode, industry specialist , Senior Managing Director at KPMG LLP Washington National Tax (WNT) and our host, , comment on the pressing issues posed by tax professionals in the field raised at the TP Minds West Coast event in Palo Alto.

We explore the implications of GenAI on transfer pricing:

- Does GenAI-generated content constitute new intellectual property?

- How does automation shift the allocation of intercompany costs?

- What steps can companies take to stay proactive amid the rapid adoption of this technology?

From understanding the evolving role of data to tackling comparability challenges, this discussion explores the dynamic intersection of GenAI and transfer pricing in Part 1 of this two-part episode.