Operational Transfer Pricing

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Operational Transfer Pricing

Automate your transfer pricing documentation through a pragmatic approach to transfer pricing technology

One of the biggest challenges in transfer pricing is ensuring that your business model and transfer pricing policy translates into a simple intercompany agreement that is accurately reflected in your financial statements and statutory returns. Often, the data you need for transfer pricing is not "tax sensitized" and is scattered across disparate IT systems and databases. We'll turn these challenges into an opportunity to create a pragmatic, user-friendly solution. We'll work with you to design and streamline your processes―and then automate them using an appropriate technology solution that fits your long term IT vision. As a result, you'll transform your tax department, and go from simply being compliant to being in control.

What is operational transfer pricing?

In a changing transfer pricing landscape with increased regulation and tax authority scrutiny, it has never been more important to have effective and continuous implementation and monitoring of TP policies throughout an organization. 

Operational transfer pricing (“OTP”) focuses on the details of how practical these policies actually are to implement for the business and the best way to do so.

With this in mind, we have put together a series of short videos where Deloitte transfer pricing professionals outline the key points that you should know in respect to OTP and how Deloitte can best help your organization navigate to a successful solution.

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What is OTP?

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Operational Transfer Pricing (“OTP”) provides confidence that the agreed-upon transfer pricing policies are actually happening on the ground, all around the world. This not only enables the business to implement these policies, but also to confirm that they are consistent in all the company’s records.

This area is under increasing scrutiny due to the BEPS project and tax authorities around the world testing, in detail, the actual outcomes of TP policies. Without a robust OTP system in place, organizations might not be able to implement TP policies consistently nor respond appropriately to TP audits.

For many companies, transfer pricing represents the largest tax risk if the company and tax authority cannot agree on the appropriate arm’s length price. This can result in large penalties from the tax authorities, which has implications not only on finances, but also on reputation in the market.

Watch the complete video series

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How Deloitte can help?

There are a wide spectrum of technology solutions available in the marketplace that can fulfill your current business needs―but there is no one "perfect solution". To help you to identify the best fit for your organization, Deloitte has a unique approach and process to help you:

  • Improve your existing transfer pricing processes
  • Identify data and people gaps
  • Leverage your existing IT infrastructure and future IT vision

By implementing a suitable technology solution and updated processes, you will enjoy the following benefits:

  • An accurate reflection of TP policies in your financial statements;
  • A near real-time access to data necessary to monitor your transfer pricing
  • A timely identification of any TP adjustments necessary;
  • An efficient and quick book close process; and
  • Readily available data segmentation that makes it possible to fulfill TP documentation and compliance requirements.
     

OTP and the impact of COVID-19

The current global environment forces tax teams to do more with less, focus on preserving cash, reducing costs and providing increased value in a difficult business environment. Ensuring that efficient and appropriate operational transfer pricing processes are in place, has never been more important.

With this in mind, there are a wide range of short-term responses and more longer-term changes that can all help mitigate the potential financial and operational impacts of COVID-19.
 

Addressing the impact of COVID-19

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Get in touch

Rahul Tomar
Partner, Deloitte US
rahultomar@deloitte.com

Sophie Brown
Partner, Deloitte UK
sophiebrown@deloitte.co.uk

Get in touch

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