Transfer pricing integration and implementation

The new environment

In the current economic and regulatory climate, transfer pricing implementation requires more attention than ever before. It’s no longer simply an issue for finance and tax teams and includes a range of other stakeholders.

All stakeholders, from the CFO to the non-executive Directors, are asking for more accurate, real time visibility on the impact of transfer pricing flows on the Effective Tax Rate (ETR) and the financial results of specific entities.

An end to end issue (E2E)

To mitigate the risks inherent in transfer pricing compliance and to realise the expected benefits of planning, you need to look at transfer pricing as an E2E issue. An organisation can build a comprehensive E2E process that supports the company’s life cycle of transfer pricing.

Designing and embedding E2E Execution using the transfer pricing lifecycle as a framework

Identification of all TP trigger events

How do you know when new transactions arise or changes occur that impact on transfer pricing? Who is responsible for the identification of new events / changes to existing transactions?

Functional and high level TP policy

How are new transactions / events assessed for materiality / complexity? Who is responsible for the assessment of facts and economic characterisation of transactions?

Assessment and selection of final TP policy

Who signs off / approves transfer pricing methodologies (on a transaction, country, regional and global basis)? How do you ensure that the transfer pricing policies are globally consistent for similar transactions?

Core TP documentation

Who is responsible for the documentation, i.e. transfer pricing report and intercompany agreements? How do you ensure that all documentation are captured in the TP repository and SLAs all signed off?

Business Logic documentation

Who is responsible for translating transfer pricing policy documentation into systems implementation? Is there an operating manual in place?

TP Production/implementation

Who is responsible for undertaking the transfer pricing calculations? Is this done on a transaction type, country regional or global basis?  Is there a robust audit trail or process map in place?

Validation, control and review

How are data sources identified, verified and approved on a transaction, country, regional and global basis? Who is responsible for reviewing and approving the transfer pricing calculations?

Transfer Pricing Governance

Do you have clearly defined roles and responsibilities across the Group in respect of transfer pricing? Are the views of the key stakeholders taken into consideration in the development and execution of your transfer pricing group strategy?

The responsibility of each stage of the life cycle is likely to be split between multiple stakeholders across several functions.

Only by developing clearly defined processes (together with agreed roles and responsibilities) can an organisation truly embed transfer pricing and successfully manage the E2E Execution.

The benefits of successful E2E execution

We work across internal functions to understand the strategy, structure, process, people and technology issues needed to embed E2E within an organisation. The benefits include:

  • Improved communication and overall efficiency throughout the enterprise, benefitting all functions and the organisation as a whole
  • Opportunities to optimise the impact of transfer pricing policies on the group’s Effective Tax Rate
  • The release of significant tax provisioning in relation to uncertain transfer pricing positions – a positive impact on the financial results of the group
  • More informed decision making capability from more accurate financial data. 
  • The ability to confirm the correct transfer pricing policies have been implemented for auditors and tax authorities, leading to considerable savings for the group - time, money and reputation.

Contact us

Follow us