AI in Transfer Pricing: Risk or Opportunity?

Artificial intelligence (AI) is rapidly reshaping transfer pricing (TP) practice and enforcement. Tax authorities increasingly use AI-driven risk models for audit selection, while multinational enterprises apply machine learning to automate benchmarking, documentation, and operational TP monitoring. This Article reviews the emerging literature and legal context to assess a key question: is AI in TP a risk or an opportunity? Drawing on OECD reporting, peer-reviewed studies, and practitioner and regulatory materials, the Article identifies measurable opportunities, including faster benchmarking and documentation, predictive compliance controls, and more consistent application of TP policies across jurisdictions. It also isolates material risks: opaque "black box" outputs, data and algorithmic bias, unsettled regulatory treatment under the EU AI Act and data protection law, and expanding litigation and disclosure disputes. The Article concludes that AI is a net opportunity for TP governance only when deployed as decision support under robust human-in-the-loop safeguards, with explainability, audit trails, and periodic bias review sufficient to preserve the arm's length standard and procedural fairness.