The growing web of circular deals among billion-dollar companies funding AI’s explosive growth is feeding investor worry about a massive bubble. For corporate tax departments there’s another concern, maybe unrecognized: the risk of transfer pricing regulation.
Circular deals occur when a company invests in a business that then becomes a significant customer.
With technology giants’ investments, AI startups become the companies’ customers for key products and services, weaving codependencies that are building the boom.
Tax specialists say increasing interdependence could trigger revenue agencies to consider whether the companies are related for tax purposes.
“There’s been so many of these deals ...
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