Ultimate Transfer Pricing Career Guide (2024)

Transfer pricing (or just TP) is the process of setting the price for goods and services in cross-border transactions between related entities (subsidiaries or affiliates). For example, let's take Tesla and assume it manufactures batteries in Germany, assembles cars in the US and sells them in Norway. In this case, Tesla Germany would have to sell batteries to Tesla US, and Tesla US would assemble cars using this component and sell them to Tesla Norway. According to international and domestic tax law, Tesla would have to ensure that each transaction (transfer) is priced fairly - because transfer pricing is effectively the process of deciding where to put profits and losses in an international business. 
 
This should give you a flavour of what transfer pricing experts do - they help set the prices and, later on, document and defend them in front of tax authorities. So, effectively, transfer pricing is a part of the international tax discipline. 

The answer to this question really depends on the organization you work for (I will discuss them later on), but let me try to explain in general terms. 
 

• Interns/junior consultants/junior specialists - the entry-level. This is the lowest position level where TP specialists work at the start of their careers. They typically help the team with the basic work and learn the ropes. Interns and juniors usually do benchmarking studies, draft basic documentation, and do some simple financial and market analysis.
• Senior consultants/senior specialists - the workhorses of transfer pricing. They will usually do a more advanced TP analysis and reports. In addition, they prepare the draft documentation and memos for the manager's review and train their junior level colleagues. 
• Managers and advisors (in-house) - usually the leads of TP projects. The manager checks the TP specialist's work, makes suggestions and approves it for further use. In Big4, managers talk with clients and usually run functional interviews. You need to be ready that there would be much more people management and client work at this level. At the same time, the in-house TP advisor role would often be mainly focused on technical TP work. 
• Directors, partners, EVPs - the senior leaders of the transfer pricing team. They do a lot more client work and participate in high-level discussions in the most complex and problematic projects. They are the most experienced people in the team, and managers would often reach out to them if the transfer pricing problem is controversial. 

Here, I've tried to list the most valuable skills for a transfer pricing career. The list is by no means comprehensive, but in my hiring manager experience, people with these skills tend to be the most successful candidates. Some of them are easier to test during the recruitment process, while others would be more important for career development once you are in. Also, here I was primarily focusing on the technical skills - I'll share my view about soft skills relevant for TP at the end of this list. And just to be clear - it's an entry-level list. 

Level: basic - you need to know the OECD Model Tax Convention, what the "BEPS" means, and how different countries' tax authorities agree if they have conflicting views (hint - MAP).  

Level: basic - your goal here is to understand the P&L and balance sheet, how they relate to each other, and how accounting works. 

Level: basic - you want to focus on entry-level micro- and macroeconomics (including international trade). You need to understand concepts of firm behaviour, profit maximization, interest rates, inflation, etc.  

Level: basic/intermediate - even though many entry-level TP jobs don't require you to know TP, it would be a great advantage if you know at least some of it. You'll definitely differentiate yourself from the crowd.  

Level: basic/intermediate - I think it's expected now from everyone - you need to work with basic computer applications like emails, MS Teams/Zoom, files and folders, browsers, etc. Basic MS Word and SharePoint skills also go here. 
How to study: I was never searching for anything like that, but I quickly found a good course on LinkedIn Learning. However, there are many other options, so feel free to find the one you'd like. 

Level: Intermediate - in your TP work, you'd probably work quite a lot with data and tables, and it's very useful to have good Excel skills. You need to be able to use all of the essential formulas (including the famous VLOOKUP!). What's more important - you need to understand the problems you can solve with Excel, be able to Google relevant formulas quickly, and semi-automate mundane tasks.  

Level: Intermediate - you'll need to do some presentations and reports in your work, and PowerPoint slides are still the primary communication instrument in the TP world. 
How to study: check out this Coursera course by PwC.

Level: Optional - TP is quite a conservative field, and in many organizations, the work is done in a way it was done 10 or even 15 years ago. However, I clearly see a growing demand for digitalization and automation. If you have technical skills that would help your company in this journey, this can differentiate you from other candidates. Just to be clear - I don't think you have to have the 100% ability to deliver the automation solution - it's more about the understanding of possibilities and available options. 
How to study: I'd say knowing advanced Excel, basic Python and/or MS Visual Basic, Power BI would make you stand out and help in your career in the 2020s. There are plenty of free courses - just choose one area and pick the intro course.

Level: Optional but will become crucial soon. 

You should absolutely use ChatGPT to prepare yourself for transfer pricing career. It's very knowledgable and often performs on par with tax advisors. What's more, it can prepare you for a recruitment interview, identify your gaps and substantially increase chances of success. 

I don't think that soft skills for TP are substantially different from any other finance or analytics job. The essence of the work (especially in the first two or three years) is all about gathering information, doing good analysis, writing memos, documentation and preparing PowerPoints. I'd say that good English, and especially writing and presentation skills are the main things you want to focus on. Attention to detail, good analytical skills and time management are also critical in the TP profession. 

As of 2022, there is only one qualification that is recognized by most of the TP industry worldwide - the Advanced Diploma in International Taxation (ADIT).
 
The Chartered Institute of Taxation (CIOT), in the UK, offers a professional qualification and credential called ADIT to international tax professionals. From my experience, in the US, UK and Europe, the CIOT ADIT qualification is accepted by everyone (tax and advisory firms, Big Four firms and governments), so it's a very competitive edge to have it. In addition, if you are ADIT, your future employer would automatically assume that you know TP and international tax well enough to do most of the work. 
 
To acquire the full ADIT qualification, you need to take three exams (the Principles of International Taxation exam and two jurisdictional or thematic exams). You can check the list of the exams in the syllabus.  (I must say I don't really like the CIOT new website as some of the links don't work and it's sometimes counter-intuitive, so if you have questions don't hesitate to reach out to them or to me directly).
 
In 2020, I created the online transfer pricing course for the ADIT exam preparation and wrote the textbook to help with the preparation. Remember that there is an option to get a standalone TP certificate after passing the ADIT TP exam - so if you don't want to do all three exams, one can be sufficient. 

Also, if you are going to focus on managerial, financial and organizational aspects of TP, you may consider taking the CIMA qualification - even though it's not about TP, it gives a lot of helpful knowledge and skills for the profession. I observed my CIMA-qualified colleagues, and I was impressed!

It really depends on what you want in your life and career. Here are a few facts that you need to consider:

1. TP is niche - first of all, it's a unique global profession, and not many people are interested in it. As a result, there is a high demand for professionals, salaries are high, but the positions are usually relatively clustered. For example, in many countries, TP jobs are concentrated in the capital and a couple of the largest cities, and the primary employers are Big4 companies. Also, it's often not that easy to move out from TP without losing in salary. Finally, the more you work in TP, the more difficult it is to change the profession (similar to other niche jobs). 
2. TP is an international profession - there are (almost) no borders in the TP world because most of the rules and principles are similar. So if you want to change the country at some point in your career, TP can be a good choice.  
3. TP is growing - the number of TP jobs grows every year, and the market is far from fully saturated. Even though there are discussions about the adequacy of the arm's length principle, I don't think it will be replaced anytime soon, so TP is a relatively safe choice.
4. TP is based on the fundamental principles - the good news is that some of the basic concepts are pretty simple and are not changing much (like the main transfer pricing principle - "the arm's length principle"), so if you know them well, you can grasp new things very quickly. 
5. TP is dynamic - TP laws and regulations change very often, and you need to keep up with them. Tax and transfer pricing are very special fields, and the job requires a constant focus to always know about the latest developments in your area of expertise. 
6. Noone will understand what you are doing (including your mom) - it's pretty difficult to explain to the outsider what your job is about and what you do daily. 
7. TP is all about explaining complex things in simple words - you'll often find yourself explaining complicated tax and TP-related problems to your client or business partners in a very understandable way. That's what you need to be able to do (and love as well) - educate others. 

The good thing about transfer pricing is that there are different career paths. Many organizations hire TP experts, and each of them offers different opportunities. For example, if you like cooperating with people and want to work in an environment oriented towards teamwork, dynamic and challenging, I'd say consulting firms are a good choice. On the other hand, if you are looking for more stable and exciting analytical work that is well-paid, you can consider in-house roles. 
 
What do I love about TP? Well, the most exciting thing for me is that TP is still a pretty closed and conservative world, but at the same time, you can bring a lot of innovation from other fields there. For example, if you know how to automate things, you'll find many opportunities in TP - it's still very "manual". If you can write well, or you generally like creating content, you'll be surprised how few good TP blogs and vlogs are out there. TP offers great opportunities for people with different skill sets. Another great thing about TP is that you really need to understand how businesses work to do your job. 
 
I love the professional and intellectual aspects of the job, and I can't say that it's a boring or dull environment. The job is not too challenging if you know what you're doing, but if you have some questions or challenges, there are always people around to help. 

Generalists vs specialists. Once you know what you want, there are still two paths to take. Many people who work in TP are generalists, which means they can do a bit of everything. They would usually know all of the TP lifecycle I discussed above, and they would know how to deal with various types of transactions and business models. On the other hand, some people choose a specialization - they focus on one or two areas, such as financial transactions. For example, Big4's Luxembourg and London offices are known for their outstanding financial TP expertise. It's up to you to decide what you want - generalists are very flexible and deal with various situations very well, but specialists get deep knowledge in a specific area and can truly be experts in the field. I've decided to be a generalist, and you can read this article to understand why.

The short answer is Yes. Transfer pricing is an international profession, and everything I described here applies to the US transfer pricing market. Here are a couple of nuances for you to know:

• The USA, being the largest economy in the world, has the biggest market for transfer pricing services. You're in a favorable position if you're based there.
• The USA has the oldest transfer pricing regulations and the most developed practices in this field.
• US transfer pricing regulations generally align with the OECD framework, but there are some differences. For example, some methods have different names, and their application can vary slightly. However, the overall approach is still very similar.
  
  

I hope you found this guide useful, and if you have any questions or comments, feel free to contact me anytime. I am also looking forward to opinions from other TP practitioners - this is a very subjective guide, and I know my peers can add unique insights and perspectives!
 
(I also want to make a special reference to professor Lorraine Eden, who lectured on transfer pricing between 1995 and 2019 in the US (Texas A&M). She is a great TP thought leader and she wrote a comprehensive TP career advice article in 2011 which is available under this link. Most of the points raised by Lorraine in this article are still relevant today.)

Absolutely, yes. Transfer pricing is a global discipline, and much of what I have discussed is applicable to the Indian transfer pricing landscape as well. However, there are some unique aspects of the Indian market that you should be aware of:

• India is one of the fastest-growing economies in the world and has a rapidly evolving transfer pricing market. This presents a dynamic and challenging environment for professionals in the field.
• Indian transfer pricing regulations are relatively young compared to those in the US and few other developed countries. They are constantly evolving, reflecting the country's developing economic landscape.
• While Indian regulations are influenced by the OECD guidelines, they have distinct features, including specific rules on documentation and benchmarking analyses.
• The Indian tax authorities have a reputation for being quite stringent and proactive in transfer pricing audits.
  
  

I hope you found this guide useful, and if you have any questions or comments, feel free to contact me anytime. I am also looking forward to opinions from other TP practitioners - this is a very subjective guide, and I know my peers can add unique insights and perspectives!
 
(I also want to make a special reference to professor Lorraine Eden, who lectured on transfer pricing between 1995 and 2019 in the US (Texas A&M). She is a great TP thought leader and she wrote a comprehensive TP career advice article in 2011 which is available under this link. Most of the points raised by Lorraine in this article are still relevant today.)