When transfer pricing enters the conversation, many business leaders immediately think about compliance. Yet for listed businesses, transfer pricing is increasingly a matter of corporate governance, risk management and investor confidence.
Investors, boards, regulators and audit committees are paying closer attention to how businesses manage tax risk. Transfer pricing often sits at the heart of that conversation because it affects where value is created, where profits are reported, how tax risks are managed and whether a company’s financial results can be trusted.
As businesses expand internationally, develop new operating models and navigate an increasingly complex business environment, transfer pricing can provide an important lens through which governance, risk management and strategic decision-making are assessed.
For companies operating in public markets, or preparing to enter them, the challenge is no longer simply demonstrating compliance. It’s demonstrating that tax governance keeps pace with growth, complexity and investor expectations.
Why CFOs should care
1. Investors don’t like surprises
Transfer pricing audits or cross-border disputes can create uncertainty. The financial or tax cost is often only part of the story. Investors are generally concerned about unexpected transfer pricing exposures, the strength of governance frameworks and the effectiveness of internal controls surrounding cross-border arrangements. These issues can raise questions about risk management, operational discipline and management oversight, potentially affecting market confidence far more than the immediate tax cost.
A robust transfer pricing framework helps demonstrate that the business understands and manages these risks proactively. It can also provide investors with confidence that profits are reported in a way that reflects the commercial reality of the business.
In an environment where investors increasingly assess governance alongside financial performance, transfer pricing can provide an important indicator of how effectively a business manages risk and oversight across its complex international operations.
2. Supports better decision-making
That confidence doesn’t come from transfer pricing documentation alone. It comes from ensuring transfer pricing is considered as part of wider business decision-making.
Decisions around expansion into new markets, ownership of intellectual property, centralised service functions, changing supply chains or introducing intercompany financing arrangements can all have transfer pricing implications.
Getting these arrangements right can give businesses better visibility into how value is created across the group, who is responsible for key strategic decisions and risks and how cross-border arrangements are governed. It also helps ensure that growth initiatives, operating models and financing arrangements are supported by a framework that can withstand investor, regulatory and audit scrutiny.
3. Reputation matters more than ever
Transfer pricing is no longer viewed solely through a tax lens. It has become a broader stakeholder issue.
Listed businesses increasingly face scrutiny from investors, regulators, rating agencies and the wider public. In public markets, governance concerns can quickly become credibility concerns, particularly where stakeholders perceive a disconnect between value creation, profit allocation and tax outcomes.
Where there is a disconnect, questions can quickly arise about governance, transparency and risk management. Businesses that consider transfer pricing early are better positioned to respond to investor queries, withstand tax authority scrutiny and avoid unwelcome surprises during transactions, due diligence exercises and other critical moments in the corporate lifecycle.
What good looks like
Good transfer pricing governance doesn’t need to be overly complex. The strongest frameworks are often built on consistency, transparency and early engagement with commercial decision-making. In practice, this means transfer pricing policies reflect commercial reality, key intercompany arrangements are properly documented, and tax is involved early when significant business decisions are being made.
The most effective frameworks also evolve alongside the business, ensuring transfer pricing remains aligned with changing operations, growth plans and stakeholder expectations.
Importantly, transfer pricing is most effective when it is embedded within wider governance processes, rather than treated as a standalone tax exercise.
The key takeaway
From my in-house experience, I can say that the most effective tax teams don’t act as business blockers; they act as business enablers. Their role isn’t to stop commercial opportunities from happening, but instead to help the business achieve its objectives in a way that’s commercially sensible and tax robust.
For listed businesses, transfer pricing should be viewed as a strategic governance tool, not simply a compliance obligation. When embedded within governance frameworks and commercial decision-making, it can strengthen investor confidence, support growth ambitions and demonstrate that the business is operating in a transparent, resilient and well-controlled manner.
Building confidence through good tax governance
Whether you’re preparing for an IPO, navigating the demands of public markets or undertaking a significant transaction, transfer pricing should form part of the wider governance framework.
HaysMac’s transfer pricing specialists work closely with our Equity Capital Markets team to help businesses navigate complex cross-border arrangements, prepare for heightened scrutiny and build governance frameworks that inspire confidence among investors, regulators and other stakeholders.
To discuss your transfer pricing framework, tax governance strategy or upcoming transaction plans, please get in touch with our transfer pricing specialists.
