In the world of globalized commerce, the geographic location of IP is often key to determining where corporate profit is generated, and tax is paid. Taxation of IP is one of the most volatile areas of international tax and transfer pricing because it’s difficult to define and locate.
Valuing IP is the basis for making these determinations, and these transfer pricing arguments can lead to high-profile litigation between tax jurisdictions and corporations that involve large sums of tax and potential penalties.
Additionally, countries are starting to impose separate taxes on IP being used in their country.