Operating Profit Redefinition Under IFRS 18: Systematic‎Literature Review of Implications for Multinational‎Transfer Pricing

  • Authors

    • Yonghwa Han Faculty of Economics and Business, Universitas Nasional, Indonesia
    • Andini Nurwulandari Faculty of Economics and Business, Universitas Nasional, Indonesia
    • Hasanudin Faculty of Economics and Business, Universitas Nasional, Indonesia
    • Aghnia Wulandari Faculty of Economics and Business, Universitas Nasional, Indonesia
    https://doi.org/10.14419/c4xhjc56

    Received date: November 24, 2025

    Accepted date: January 6, 2026

    Published date: March 20, 2026

  • IFRS 18, Transfer Pricing; Operating Profit Measurement; Multinational Enterprises; Transactional Net Margin Method; Profit Split Method; ‎Accounting Standards

  • Abstract

    The implementation of IFRS 18 introduces fundamental changes to the definition and measurement of operating profit, which significantly ‎impact multinational enterprise transfer pricing practices. Unlike broader IFRS-related issues, such as the general harmonization of account-‎ing standards across jurisdictions, the redefinition of operating profit under IFRS 18 is specifically designed to amalgamate both recurring ‎and non-recurring items. This shift creates unique challenges for transfer pricing methodologies, particularly in the application of the Trans-‎actional Net Margin Method (TNMM) and Profit Split Method (PSM), where stable and consistent profit measurements are crucial. Using ‎the PRISMA guidelines, the study employs both qualitative thematic analysis and quantitative content analysis to identify patterns and rela-‎tionships between the evolution of accounting standards and the reliability of transfer pricing across multiple academic databases and peer-‎reviewed publications. The research reveals that IFRS 18's residual approach to operating profit determination creates substantial volatility in ‎profit level indicators fundamental to transfer pricing applications. The Transactional Net Margin Method faces critical vulnerabilities due to ‎its dependence on stable operating profit measurements, while the Profit Split Method demonstrates greater resilience but requires enhanced ‎complexity management. Cross-jurisdictional implementation disparities create additional challenges as different countries adopt IFRS 18 at ‎varying timelines and with local modifications, undermining comparability analyses essential for transfer pricing applications. The study ‎identifies significant regulatory coordination gaps, where major jurisdictions develop inconsistent guidance approaches, creating substantial ‎implications for multinational enterprise compliance strategies and dispute risk management. The findings conclude that IFRS 18 implemen-‎tation necessitates fundamental adaptations to established transfer pricing methodologies and enhanced coordination between accounting ‎standards and transfer pricing regulatory development to maintain system integrity and effectiveness.

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  • How to Cite

    Han, Y. ., Nurwulandari, A. ., Hasanudin, & Wulandari, A. . (2026). Operating Profit Redefinition Under IFRS 18: Systematic‎Literature Review of Implications for Multinational‎Transfer Pricing. International Journal of Accounting and Economics Studies, 13(2), 566-572. https://doi.org/10.14419/c4xhjc56