US Transfer Pricing Market: Stop Thinking About Risk and Seize the Opportunity

In 1958, the economist J K Galbraith overturned a piece of conventional economic wisdom. Once they reach a certain size, he argued, businesses do not really seek to maximize their profits, as they are usually supposed to. Instead, they focus above all on reducing their exposure to risk. “The development of the modern business enterprise,” he wrote, “can be understood only as a comprehensive effort to reduce risk.” 

At the OECD in Paris during 2019, as tax leaders from the world’s great corporations lined up to plead with national leaders, they seemed to confirm Galbraith’s observation. “We don’t mind what rate we have to pay,” they recited in unison, “as long as compliance is simple and disputes can be minimized.”

However, the pandemic, contraction, and subsequent cash constraints have shown that risk is an inevitable part of life in any industry. Taking a clear-eyed view of opportunity and potential rewards – rather than viewing every regulatory change as a risk to be mitigated – would benefit transfer pricing (TP) professionals working across the US market.

For example, astute TP management can be part of solving cash-flow problems thrown up by the pandemic and the economic downturn. Quick-thinking advisers can pull TP levers to help multinationals smooth out the issues faced by their subsidiaries in harder-hit jurisdictions. One TP leader explains: “As an example, you may have a business in the US and an affiliate in China. If China is doing really well, you may want to adjust the process of that entity to potentially put more cash in the US and alleviate pressure here”. He explained: “You can call it managing the returns of different entities in the group as a tool to address some constraints imposed by a coronavirus.”

Another example of the potential opportunities that the pandemic has brought is that recessions often provide opportunities for corporate consolidation, meaning it is likely that the economic fallout from COVID-19 will spark a series of mergers and acquisitions (M&A) deals in 2020 and 2021. Thus, considering the Internal Revenue Service’s (IRS) recent announcement of a new dividend-deduction rule under Section 245A, which sets up a puzzling requirement, every American shareholder in a company purchasing a controlled foreign corporation must agree to end the tax year on the clearance of the sale, or else the seller will have to pay tax on the returning dividends as income.

A simplistic view sees this rule as one more risk for buyers to try to avoid. However, a dynamic tax advising function will recognize that the regulation hands buyers a crucial piece of leverage over sellers. If they can get their shareholders in line, they can use the threat of double taxation as a means to secure better terms from the seller.

Identifying that apparent tax risk is actually a business opportunity requires deep technical knowledge and creativity. In the US, law firms with dynamic TP functions bring these skills to bear and make a dent in a market traditionally saturated by the Big Four. The TP market in the pandemic era offers law firms the opportunity to grow their market share, as well as enabling niche and boutique professional services firms to capitalize and achieve a competitive advantage. 

To capitalize on this kind of opportunity requires another skillset: diplomacy. There is little wonder that every tax leader’s dream hire is the person who combines subject-area expertise with an instinctive flair for building and keeping relationships. When it comes to seizing initiative and advantage in a rapidly changing TP landscape, it counts to have both. Mason Rak has executed some of the most challenging strategic assignments across the US market, observing a shift to the acquisition of TP specialists who have both solid expertise in TP matters and proven relationship-management skills. “We expect TP specialists to generate business both outside and within our US network,” a global TP leader explained.

Taking another area where the US has made waves in the world of TP: the global intangible low-taxed income (GILTI) provisions of the 2017 Tax Cuts and Jobs Act. The OECD’s pillar two minimum-taxation rules will replicate a GILTI-style regime on a global scale. 

Discussions with global and US TP leaders reveal that they could make these changes in their stride. Others were more cautious. Handling GILTI-style TP rules worldwide has the potential to be an “absolute nightmare”, one TP manager said. “We don’t like GILTI … How are we going to deal with GILTI everywhere’?”

The truth, though, is that TP leaders need to brace for vastly increased uncertainty in 2021 as countries seek to levy taxes to fund their coronavirus-induced spending. Pillar two is only the beginning, but it shows the way forward for the most successful practitioners. Like the companies using their GILTI experience to anticipate the compliance challenges of pillar two, TP professionals must make use of global regulatory experience to maintain flexibility and stay ahead of, and not just react to, rapid changes.

In the US, the uncertainties of the pandemic and the OECD digital tax process are compounded by the politics of a general election. If Joe Biden wins, he has committed to doubling the tax rate on GILTI and imposing a 15% minimum ‘book-tax’ on corporations with $100 million in income. If Trump wins, commentators anticipate more chaotic fiscal measures in the vein of the executive order on payroll taxes. Such measures could easily stray into the TP realm given the international politics of digital taxation.

Are companies prepared not just to act defensively, but to seek opportunities and advantages no matter what the outcome? 

Mason Rak is a global specialist tax and TP search firm, who operates extensively across the US market. The firm executes some of the most challenging strategic TP assignments across North America and acts as a trusted advisor to accountancy and law firms. If you would like to learn more about the market and strategic TP opportunities across the US, please contact Oleg Rak, Managing Partner, on [email protected] or call +44 786 911 3281.


United States

Successfully identified the following individuals for global professional accountancy and law firms in New York, San Francisco (Silicon Valley), Chicago, Dallas and Houston:

  • Head of International Tax
  • Transfer Pricing Partner
  • International Tax Partner
  • Transaction Tax Partner
  • Transfer Pricing Director
  • Head of Transfer Pricing (Law Firm)
  • Transfer Pricing Partner
  • Transaction Tax Partner


Successfully placed the following roles within leading professional accountancy and law firms:

  • Transfer Pricing Partner
  • Indirect Tax Partner 
  • Transfer Pricing Partner 
  • Transaction Tax Director 
  • Tax Disputes Director
  • Tax Legal Director


Mandated to strategically growth Tax business for several international and domestic  professional services and law firms in Munich, Frankfurt and Dusseldorf:

  • Expatriate Tax Director
  • Transfer Pricing Partner
  • Real Estate Tax Senior Manager
  • Transfer Pricing Manager 
  • Transaction Tax Director 
  • Transfer Pricing Director
  • Transfer Pricing Team Move 
  • Indirect Tax Partner 


Over 25 mandates completed for professional services and law firms  including:

  • Head of Transfer Pricing 
  • Financial Services Tax Director 
  • International Tax Partner (Law Firm)
  • M&A Tax Senior Manager 
  • International Tax Director
  • Indirect Tax Partner
  • Tax Legal Partner

United Arab Emirates

Engaged on a transformation search project to identify the Tax Leadership team for the  professional services tax team across the UAE market:

  • Head of Tax
  • Head of Transfer Pricing
  • and Head of Indirect Tax
  • Expatriate Tax Director 
  • Head of Financial Services Tax major international professional services firm in Abu Dhabi

Hong Kong

Successfully identified an International Tax Director and Financial Services TP Head for leading professional services firms.