Companies’ Sharing of AI Agents Risks More Tax Fights

Multinationals sharing proprietary AI agents among their subsidiaries risk the possibility of more disputes with tax authorities as questions arise about how to price that sharing.

The fact that any person with access to the technology can make or add to an agent raises issues about where the value of the agent should be assigned, especially because there is no law or international standard governing the transfer pricing — valuation of affiliate transactions — of AI.

Companies may find themselves in a situation where multiple countries claim they’re owed more tax because they think the value of an AI agent was created in their jurisdiction.

An AI agent is software coded to perform autonomous tasks such as collecting and analyzing data or researching and writing memos.

A fundamental issue is whether sharing the artificial intelligence agent is sale of a service, or sale or licensing of intellectual property, which is usually of higher value. The determination isn’t always easy, but is critical under transfer pricing rules, which govern intragroup transactions and have enormous implications for profit allocation and tax bills.

For example, Grant Thornton partner Samit Shah said, a sales team dispersed through 30 countries contributes to development of an agent that finds new leads to sell products.