Streamline: Operational Transfer Pricing (OTP)

Transforming the process and managing change

One of the biggest challenges generally for the Multi-National Enterprises (MNEs) is to ensure correct and timely implementation of intra-group Transfer Pricing (TP) policies in the books of account and its subsequent monitoring. Quite often, it is experienced that a lot of MNEs finance and tax teams are faced with certain challenges on implementation and monitoring of TP policies, some of which are:

  • Ensuring that the TP policies are correctly followed in the accounting systems or ERP?
  • Monitoring various TP positions required for budgeting, computing quarterly and year-end adjustments, evaluating new business models, and tax planning
  • Automating the preparation of TP business segments (including cost allocation) for any period within a year or at the year-end, for TP compliances and audit purposes
  • Reduce the processing time, manual intervention, and probability of errors for inter-company accounting and true-up adjustments

Due to enhanced regulatory monitoring of effective implementation of TP policies, segmental accounts, cost allocation, it is imperative for MNEs to adopt an automated and integrated TP framework at an operational level. Additionally, with a shift towards technology, there is a need for accelerated automation in processing of TP data and performing real-time data analytics to support evolving intra-group business models and optimizing the Effective Tax Rate (‘ETR’).

Keeping the above considerations, Deloitte Touche Tohmatsu India LLP (DTTILLP) has now developed its proprietary Operational Transfer Pricing solution, which can be leveraged to optimize, streamline, and automate TP processes and data, and address typical operational challenges. The solution is developed giving due consideration to existing IT landscapes, ERP footprints, TP processes, and data availability within an organization; eventually resulting in reduced risk, enhanced process, and advanced data analytics.

Some of the key benefits of the solution include:

  • Effective and timely implementation and monitoring of TP policies
  • Minimized disruption and cost of responding to queries by tax and other regulatory authorities
  • Automated information extraction, managing group ETR effectively
  • Easy intra-group related MIS generation for business and reporting purposes
  • Transparent audit trials on relevant TP data points