Global Transfer Pricing Update August 2026

August 2026 was an active month for transfer pricing, driven less by major new global legislation and more by implementation, enforcement and significant court decisions. The OECD moved its proposed revision of the Chapter VII guidance on intra-group services into the next consultation stage, South Africa put the detailed framework for its advance pricing agreement programme in place, and Malaysia amended its transfer pricing rules. Türkiye and Chile also provided clear evidence of tax authorities moving towards increasingly data-led transfer pricing risk assessment, while HMRC strengthened the link between its existing transfer pricing compliance guidance and the route for correcting identified errors. India was particularly active, with important decisions covering advertising and marketing expenditure, permanent establishments, corporate guarantees and the use of recognised transfer pricing methods. Across these developments, the common message for multinational groups is that transfer pricing positions must increasingly be supported by reliable data, evidence of what happens in practice and documentation that reflects the actual transaction.

1. OECD: INTRA-GROUP SERVICES REVIEW MOVES FORWARD

On 24 August 2026, the OECD published the comments received on its proposed revision of Chapter VII of the OECD Transfer Pricing Guidelines, which deals with intra-group services. The underlying consultation ran from 1 June to 22 July, and the comments will now feed into a public consultation meeting scheduled for 9 November 2026 in Paris. The proposed revisions remain draft guidance and should not yet be treated as final OECD rules.

The review focuses on a basic but increasingly important question: has a genuine intra-group service been provided and is the charge consistent with the arm's-length principle? The draft gives greater attention to accurately identifying the transaction, demonstrating the benefit received by the entity paying for the service and selecting an appropriate pricing method.

For example, a management-fee invoice and a cost allocation do not by themselves prove that the recipient received something an independent business would have been willing to pay for. Businesses need evidence showing what was done, who performed it, why the recipient needed it and how the charge was calculated.

What this means: multinational groups should review material management, IT, administrative and shared-service arrangements. Agreements, service descriptions, benefit evidence, allocation keys and actual business conduct should be consistent. The OECD proposals are not final, but they provide a useful indication of the direction future guidance may take.

2. SOUTH AFRICA: APA FRAMEWORK BECOMES OPERATIONAL

South Africa delivered one of the clearest new TP developments of August. On 7 August 2026, SARS published six notices, 7787 to 7792, in Government Gazette 55152 covering its DTA advance pricing agreement system. The notices set out applicant eligibility, fees, grounds for rejecting applications, processing requirements, information required in a preliminary APA and the procedures for operating the system.

An advance pricing agreement (APA) allows a taxpayer and one or more tax authorities to agree in advance how the arm's-length principle will apply to specified related-party transactions. For large or recurring cross-border arrangements, this can reduce uncertainty and the risk of future double taxation or lengthy disputes.

The August notices are important because they move the South African regime from a legislative concept towards a detailed administrative process that businesses can assess in practice.

What this means: groups with significant recurring South African related-party transactions should consider whether an APA could provide useful certainty. This is most relevant where the amounts are material, the pricing issue repeats over several years or the transaction creates a meaningful risk of double taxation. A successful application will still require strong functional analysis, reliable financial information and a defensible methodology.

3. TAX AUTHORITIES MOVE FURTHER TOWARDS DATA-LED ENFORCEMENT

Two August developments provide particularly clear examples of how transfer pricing risk assessment is changing.

Türkiye: AI and big-data analysis enters TP risk assessment

On 12 August, Türkiye's Tax Inspection Board announced that VDK-MİHENK, its new risk-analysis system, had entered use. The system analyses financial data and electronic records using artificial intelligence and big-data techniques. Transfer pricing, compliance with the arm's-length principle and the movement of profits between related parties through pricing are specifically identified as areas the system is intended to assess.

This does not create a new transfer pricing rule. What changes is the tax authority's ability to identify potential risk. A business can therefore face scrutiny because patterns in its underlying data look unusual, even before an auditor begins a traditional review of its Local File.

Chile: enforcement data shows how risk-based TP audits are developing

On 24 August, Chile's tax authority, the SII, published detailed TP enforcement statistics. It reported 125 transfer pricing audits during 2025, producing approximately CLP 94.0 billion in revenue. The SII explained that its risk analysis considers factors including recurring losses, margins outside market ranges, transactions with low-tax jurisdictions, major business changes and inconsistencies between financial and tax information. It also combines tax returns, financial statements, automatic information exchange and Country-by-Country Reporting data.

Chile is also developing the certainty side of the system. On 18 August, Chilean and Swiss tax authorities held a technical session focused on bilateral APAs and the tax certainty they can provide for cross-border related-party transactions.

What this means: transfer pricing documentation can no longer be viewed in isolation. Local Files, accounting data, margins, invoices, intercompany agreements and tax reporting need to tell the same story. Differences between documented policy and actual outcomes are becoming easier for tax authorities to identify.

4. UNITED KINGDOM: HMRC CONNECTS TP GUIDANCE WITH THE ERROR-CORRECTION ROUTE

On 18 August 2026, HMRC updated its Guidelines for Compliance 7 (GfC7), which sets out HMRC's expectations and common risk areas in transfer pricing compliance. The August change itself was targeted: HMRC added information on the Transfer Pricing and Profit Diversion Compliance Facility (TP&PDCF) to the section explaining what businesses should do if they identify an error in their transfer pricing position.

This distinction matters. August did not introduce HMRC's wider expectations around functional analysis, supporting records or TP governance; those were already part of GfC7. The new August element strengthens the connection between identifying a transfer pricing problem and taking action to correct it.

HMRC's guidance says that where a business identifies an error affecting the application of the arm's-length principle, it should consider whether earlier years may also be incorrect and recalculate the relevant tax liabilities.

What this means: UK businesses should not treat a TP review as purely prospective. If a review identifies a material historic error, the next question is whether earlier filings also need to be corrected and whether the TP&PDCF provides an appropriate route for addressing the issue.

5. MALAYSIA: RULES AMENDED AND FINANCIAL TRANSACTIONS RECEIVE GREATER ATTENTION

Malaysia had two connected developments around the start and end of August.

First, HASiL published dedicated Transfer Pricing Guidelines on Controlled Financial Transactions: Intra-Group Loans on 30 July 2026, applying to intra-group loan arrangements entered into from 31 July 2026. August was therefore the first full month in which the new guidance applied.

The guidance is important because pricing an intra-group loan involves more than selecting an interest rate. The commercial features of the arrangement, the position of the borrower and the terms independent parties would realistically agree all matter.

Malaysia then made the Income Tax (Transfer Pricing) (Amendment) Rules 2026, P.U.(A) 300/2026, on 19 August, with the rules published in the Gazette on 27 August. Among the changes, the rules revise certain definitions, define an MNE group as associated enterprises with business establishments in two or more jurisdictions and allow a TP adjustment made to one party to be reflected by an offsetting adjustment to the other party's assessment, on request and subject to approval by the Director General. The rules state that they are deemed effective from year of assessment 2023.

What this means: groups with Malaysian related-party transactions should review both their documentation and the mechanics of any potential TP adjustment. Groups with intra-group loans should also ensure that their financing analysis reflects the actual borrower, contractual terms and economic circumstances rather than relying only on a generic market interest rate.

6. INDIA: A MAJOR MONTH FOR TRANSFER PRICING CASE LAW

India was one of the most active jurisdictions in August. The significance came primarily from court and tribunal decisions, rather than a single new piece of TP legislation.

AMP expenditure: Suzuki Motorcycle India

On 10 August, the Delhi High Court dismissed Revenue appeals in Suzuki Motorcycle India concerning advertising, marketing and promotion (AMP) expenditure. The dispute involved use of the Bright Line Test (BLT) to identify or price an alleged international transaction. The Court followed its existing decisions in Sony Ericsson and Maruti Suzuki, under which the BLT is not a transfer pricing method recognised by Indian law.

The practical point is important: high marketing expenditure by an Indian company does not by itself establish that it has performed a service for a foreign associated enterprise.

Samsung India: identify the transaction before pricing it

On 12 August, the Delhi ITAT issued a substantial decision involving Samsung India Electronics. Among a number of TP issues, the Tribunal deleted AMP adjustments where the expenditure had been incurred for Samsung India's own Indian business and no separate international transaction had been established. It also dealt with comparables and the benchmarking of manufacturing, networking and royalty arrangements.

The wider lesson is that the first step in TP analysis is to establish what the controlled transaction actually is. A pricing method cannot compensate for incorrectly identifying the transaction in the first place.

BBC Global News: MAP outcomes cannot simply be rolled forward

Another August decision involved BBC Global News. The Delhi ITAT held that a Mutual Agreement Procedure (MAP) resolution for earlier years was not automatically binding for years outside that MAP where the functions of the Indian dependent-agent permanent establishment had changed. The Tribunal also found that additional profit attribution may still be relevant where the TP analysis does not fully capture the functions performed and risks assumed by the PE.

This reinforces an important practical point: historic TP outcomes cannot simply be carried forward where the operating model has changed.

Corporate guarantees: Gluhend India

On 27 August, the Mumbai ITAT considered the arm's-length pricing of a corporate guarantee given to a US subsidiary. The TPO had started from commercial bank guarantee rates. The Tribunal held that a bank guarantee and a corporate guarantee are not directly comparable transactions and rejected the methodology of simply reducing the bank rate by an estimated amount. It directed an arm's-length guarantee commission of 0.50% in the circumstances of the case.

The decision is a useful reminder that comparability must consider the economic characteristics of the actual transaction, not simply the fact that two arrangements have similar names.

UCB India: the TP method must be recognised and supportable

On 31 August, the Mumbai ITAT deleted a ₹357.35 crore TP adjustment involving the sale of an identified pharmaceutical business. The TPO had attributed 99% of the overall consideration to UCB India using an approach that the Tribunal found was not one of the prescribed methods for determining an arm's-length price.

This was one of the clearest messages from India's August case law: a tax authority or taxpayer cannot simply arrive at a figure that appears economically reasonable. The method used to determine the arm's-length result must itself be legally and economically supportable.

Overall India takeaway: the August cases repeatedly return to the same fundamentals: correctly identify the transaction, understand the functions and risks, choose a defensible method and use genuinely comparable evidence.

7. FINANCING AND EVIDENCE: NETHERLANDS, UGANDA AND LESOTHO

Several August cases outside India also focused on intra-group financing and the evidence needed to support an arm's-length position.

In the Netherlands, the Hague Court of Appeal issued a decision on 5 August concerning intra-group credit facilities, variable interest and commitment fees. The Court accepted that a total-cost approach could be used when testing the arrangements against the arm's-length principle, with the analysis based on an ex-ante approach using forward rates. The decision itself was not published until 10 September, illustrating why August's case-law picture continued to develop after month-end.

In Uganda, the Tax Appeals Tribunal delivered its decision in Mini Bakeries Uganda Ltd v Uganda Revenue Authority on 21 August. It upheld TP adjustments relating to trademark royalties and intra-group financing. The case considered DEMPE functions in relation to intangibles, as well as borrower-specific credit analysis and the realistically available options relevant to financing.

In Lesotho, the High Court reached a different result in AfriSam (Lesotho) v Lesotho Revenue Authority on 6 August. The Court held that the statutory provision relied on by the Revenue Authority did not give it power to impute notional arm's-length interest on the interest-free associated-company loans in question. The imputed interest assessment was therefore set aside.

The outcomes differ because the facts and legislation differ. The common lesson is that intra-group financing needs both sound economic analysis and the correct legal basis.

OTHER AUGUST TP DEVELOPMENTS

United States - 3M. On 4 August, the US Tax Court formally implemented the outcome of the Eighth Circuit proceedings in the long-running 3M transfer pricing dispute. The Court recorded no deficiency for 3M's 2006 tax year and an overpayment of more than US$5.2 million. The underlying dispute concerned the IRS's attempt to reallocate income associated with 3M's Brazilian subsidiary under section 482.

Argentina - quoted commodity exports. General Resolution 5872/2026, although issued in July, became effective on 1 August. It updates the registration requirements for contracts involving exports of quoted goods, including transactions involving certain international intermediaries. It is therefore an August implementation development rather than an August-issued rule.

Montenegro - APA transparency. A rulebook published on 7 August and effective from 15 August sets out reporting requirements for advance cross-border tax rulings and advance pricing agreements. The measure forms part of Montenegro's international tax transparency framework rather than changing how an arm's-length price itself is calculated.

Australia - Alcoa. On 27 August, the Australian Taxation Office published its Decision Impact Statement following Alcoa of Australia Ltd v Commissioner of Taxation. The underlying case concerned the former Australian TP regime and alumina sales through an intermediary. The ATO stated that the unusual facts did not require it to change its broader approach to transfer pricing.

Colombia - head-office payments. A 13 August Consejo de Estado decision addressed the interaction between the transfer pricing regime and the separate requirements for deducting certain administration or management payments made by a Colombian branch to its foreign head office. The Court's position was that being within the TP regime did not remove the separate withholding condition for the deduction.

Kazakhstan - commodity pricing. Government Resolution No. 763 of 26 August amended the methodology used for pricing exported crude oil and gas condensate, moving specified export routes from Urals references towards a KEBCO spread. The changes apply retrospectively from 1 January 2026. This is a specialised commodity-pricing development rather than a general change to TP rules, but it is relevant to affected cross-border transactions.

WHAT AUGUST TELLS US ABOUT THE DIRECTION OF TRANSFER PRICING

1. Evidence is becoming as important as methodology

The OECD's services work and the August court decisions repeatedly highlight the importance of proving what actually happened. A technically correct benchmarking study is much less useful where the taxpayer cannot demonstrate the service performed, functions undertaken, risks assumed or commercial basis for the transaction.

2. Enforcement is becoming more data-led

Türkiye's MİHENK system and Chile's published enforcement approach are particularly clear examples. Tax authorities can increasingly analyse large volumes of financial and tax information to identify unusual margins, recurring losses, related-party flows and inconsistencies before beginning a traditional audit.

3. Certainty mechanisms are developing alongside stronger enforcement

South Africa's APA framework and Chile's bilateral APA activity show that tax administrations are not focusing solely on audits. They are also developing mechanisms that allow businesses to agree appropriate pricing in advance where transactions are sufficiently material and complex.

PRIORITY ACTIONS FOR MULTINATIONAL GROUPS

Review material intra-group services. Confirm what services are actually provided, who benefits, how charges are allocated and whether the evidence supports the documented policy.

Stress-test intra-group financing. Loans and guarantees should reflect the actual borrower's circumstances, commercial terms, credit position, available alternatives and reliable market evidence.

Reconcile TP documentation with underlying data. Local Files, agreements, invoices, ERP data, margins and year-end adjustments should be consistent with one another.

Revisit historic positions when the business changes. A method, MAP outcome or benchmark that was appropriate several years ago may no longer be reliable if functions, risks or the operating model have changed.

Consider advance certainty for material recurring transactions. Where exposure or double-tax risk is significant, an APA or MAP strategy may be more efficient than managing a prolonged dispute after the event.

LOOKING AHEAD

The next major OECD milestone is the 9 November 2026 public consultation on the proposed Chapter VII revisions. Businesses should also watch how South Africa's new APA procedures operate in practice, how Malaysia applies its amended rules and financial-transactions guidance, and how rapidly tax authorities continue to expand data-led TP risk assessment. Further judgments issued during August may also continue to enter public databases after month-end. Heading into the final quarter of 2026, the direction is increasingly consistent: businesses need transfer pricing positions that are technically correct, supported by evidence and demonstrably aligned with what happens in practice.

KEY SOURCES

1. OECD: Proposed revisions to Chapter VII of the OECD Transfer Pricing Guidelines and public comments published 24 August 2026. View source

2. South African Revenue Service: Government Gazette 55152, Notices 7787-7792, 7 August 2026. View source

3. HM Revenue & Customs: GfC7, updated 18 August 2026. View source

4. Türkiye Tax Inspection Board: VDK-MİHENK announcement, 12 August 2026. View source

5. Servicio de Impuestos Internos, Chile: TP audit statistics, 24 August 2026; Chile-Switzerland BAPA initiative, 18 August 2026. View source

6. Malaysia: Income Tax (Transfer Pricing) (Amendment) Rules 2026 and HASiL guidance on controlled financial transactions. View source

7. India: Suzuki Motorcycle India, Samsung India Electronics, BBC Global News, Gluhend India and UCB India. View source

8. Selected court and administrative sources: Hague Court of Appeal; Uganda Tax Appeals Tribunal; Lesotho High Court reporting; US Tax Court reporting; Argentina ARCA; Montenegro Official Gazette; ATO Decision Impact Statement; Kazakhstan tax alerts. View source