US Transfer Pricing Updates and Changes 2026

From 2025 onwards, the pressure points are not limited to one reform. They now cut across international tax rates, simplified distribution pricing, IP transfer adjustments, APA capacity, tariffs and customs valuation, royalty disputes, and cost-sharing arrangements.

For finance, tax, legal, and business teams, the message is simple: review the pricing model, the documentation, and the operational facts before the IRS or another regulator does it for you.

1. US international tax changes may affect transfer pricing economics

The One Big Beautiful Bill Act, signed on 4 July 2025, changes the economics of several US international tax rules from tax years beginning on or after 1 January 2026. The brief highlights changes to GILTI, now renamed NCTI, FDII, now renamed FDDEI, and BEAT. It also notes that the QBAI exemption is eliminated, meaning more overseas subsidiary income may now fall within the US tax base.

This matters for transfer pricing because many intercompany arrangements were designed under the old tax cost assumptions. Royalty rates, service fees, cost-sharing models, and IP location decisions may not produce the same result under the new regime.

For groups with offshore IP, manufacturing subsidiaries, or cost-sharing arrangements, the question is no longer only whether the pricing was supportable historically. It is whether the model still makes sense under the new rate and tax-base mechanics.

What to review: offshore IP structures, intercompany royalty rates, cost-sharing arrangements, manufacturing subsidiaries with significant assets, and whether existing documentation reflects the post-2026 tax economics.

2. Amount B creates an optional route for routine goods distribution, but not full global certainty

IRS Notice 2025-04 introduced an optional simplified and streamlined approach for certain baseline marketing and distribution activities. The rule is available from 1 January 2025 and is based on the OECD Amount B framework. In practical terms, qualifying businesses may be able to use a formula-based approach instead of preparing a full benchmarking study for covered goods distribution transactions.

That could reduce compliance effort for routine US importers or exporters of tangible goods. But it is not a universal solution.

The key limitation is cross-border alignment. The simplified approach may give comfort on the US side, but it does not automatically bind the counterparty jurisdiction. If the other country has not adopted Amount B or applies it differently, the group may still face double-tax risk.

What to review: whether the distributor is genuinely routine, whether the operating expense threshold and eligibility conditions are met, whether the counterparty country has adopted Amount B, and whether an election should be made with the original return.

3. The IRS is taking a harder view of old IP transfers where actual profits outperform projections

AM 2025-001 is an important operational signal for groups that transferred or licensed IP to a related party. The IRS clarified that, in appropriate cases, it can make periodic adjustments based on actual profits after the transfer, rather than being locked into the original projections.

That matters where IP has performed significantly better than expected.

A transfer or licence that looked reasonable at the time may still become vulnerable if actual profits later exceed projections and the taxpayer cannot rely on a specific regulatory exception. This is especially relevant for high-value software, pharma, technology, brand, and platform IP.

For cost-sharing arrangements, the same issue can arise where a buy-in or platform contribution was priced using projections that later proved too conservative.

What to review: IP transfers, licences, and cost-sharing buy-ins from open years, especially where actual profits materially exceeded the original valuation case.

4. APA certainty is still valuable, but the queue is getting longer

The APMA programme remains one of the most important routes for transfer pricing certainty in the US. But the 2025 data shows a more difficult practical environment.

The brief notes record APA demand, a growing backlog, and a reduced APMA team. External summaries of the IRS 2025 APMA report also state that the IRS received 178 APA requests in 2025, while the median completion time increased to 41.6 months.

That does not mean APAs are no longer useful. It means businesses need to be more strategic and earlier in deciding whether to seek one.

Waiting until an audit risk becomes visible may leave the group entering a long queue from a defensive position. For material, recurring, or high-risk transactions, early APA planning may still be the better route.

What to review: whether key intercompany arrangements justify APA protection, whether existing APAs need renewal planning, and whether pre-filing discussions should begin earlier than usual.

5. Tariffs are making transfer pricing and customs harder to separate

The 2025 tariff environment creates a practical problem for groups that move physical goods across US borders.

The same intercompany price can be relevant for both transfer pricing and customs valuation. That means one price can attract attention from two different regulators: the IRS for tax and US Customs and Border Protection for customs duties.

The tension is clear. A higher import price may reduce US taxable profit but increase customs duty. A lower customs value may reduce duty but increase US taxable profit. Year-end TP true-ups can also create customs consequences if they affect the value of imported goods.

This makes pricing consistency more important. It also means tax and customs teams cannot manage these issues in isolation.

What to review: intercompany goods pricing, customs valuation, year-end true-up mechanics, tariff cost allocation, benchmarking assumptions, and whether intercompany agreements say who bears tariff risk.

6. Coca-Cola shows that prior IRS acceptance may not be enough

The Coca-Cola case remains one of the most important US transfer pricing disputes for royalty arrangements.

The brief highlights the pending appeal before the Eleventh Circuit and the central question: whether the IRS can change transfer pricing methods between audit cycles after previously accepting, or not challenging, a taxpayer’s approach.

For multinational groups, the practical issue is broader than Coca-Cola itself. Long-running royalty arrangements can become risky if the economic analysis has not been refreshed, even where the method has been used for years.

Prior audit history may be helpful context. But it should not be treated as a substitute for current arm’s-length support.

What to review: royalty arrangements involving US IP owners and overseas manufacturing or supply entities, method selection support, historic audit reliance, and whether the current profit split still reflects the real value drivers.

7. Facebook reinforces the need to review cost-sharing buy-ins

The Facebook decision is another major signal for groups with cost-sharing arrangements.

The Tax Court decision issued on 22 May 2025 backed the IRS’s use of the income method for valuing platform contribution transactions, while rejecting some of the IRS’s specific assumptions. The brief frames this as the first ruling to validate the 2009 cost-sharing regulations, with the final valuation still disputed.

The practical message is that the method matters, but so do the inputs.

Financial projections, discount rates, assumptions around replacement options, and the relationship between expected and actual profits are all likely to receive closer scrutiny. For groups with CSAs, old buy-in valuations may need to be revisited before they become an audit issue.

What to review: CSA buy-in valuations, original projections, discount rates, actual profit outcomes, and whether the arrangement remains defensible under the income method.

Final takeaway

The US transfer pricing story is no longer just about preparing a file and defending a method.

It is about tax reform, simplified pricing elections, IP performance, APA strategy, tariffs, customs alignment, royalty method defence, and cost-sharing valuation. These issues affect different parts of the business, but they share the same underlying theme: the US environment is becoming more demanding, more data-sensitive, and less forgiving of outdated assumptions.

For multinational groups with US operations, the right response is to review the high-risk areas now, before an audit, tariff issue, or transaction dispute exposes the weak points.

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