IRS released Notice 2025-4 (Notice) announcing its intent to issue proposed regulations that would provide a new method for pricing certain controlled transactions involving baseline marketing and distribution activities. The new method is referred to as the Simplified and Streamlined Approach (SSA) and will be a safe harbor for intercompany pricing.

Taxpayers with cross-border transactions qualifying as baseline marketing and distribution transactions can elect to apply the SSA on a transaction-by-transaction basis starting in taxable years beginning on or after January 1, 2025.

The SSA is intended to alleviate administrative burdens, reduce compliance costs, reduce the likelihood of lengthy, expensive, and unnecessary cross-border tax disputes, and increase tax certainty for both tax administrations and taxpayers.

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