End-to-end transfer pricing

End-to-end transfer pricing for strategic control

The ongoing development of technical capabilities including digitalization makes it possible to improve and fine tune the end-to-end (E2E) implementation of your transfer pricing policy. This change can make ongoing adjustments to your transfer pricing possible which results in a limitation of (undesirable) year-end adjustments.

At the same time you can meet the increased expectations and requirements of tax authorities as well as external auditors by showing them that your transfer pricing is directly reflected in the flows it relates to.

Streamlining data, digitalization and manual processes

Large amounts of data are available, but how can you use them efficiently and successfully? This requires, among other, a clear oversight, a strategic approach, the right tooling and technology. In addition, manual and ad-hoc processes must be well structured and possibly automated in order to meet the transfer pricing regulations as well as the indirect tax reporting requirements.

Central setting, decentral execution

While the end responsibility for the strategic transfer pricing policies lies at senior tax executives’ level, the responsibility for the actual calculations of inter-company prices and compliance sits elsewhere in the company.

The entire process involves multiple hand-offs between tax, regional/global controllership, finance, shared services, information technology and external advisers. In the absence of oversight or coordination, mistakes or misalignment can occur at every transaction point due to:

Ambiguities of responsibility.

Manual, informal, ad hoc practices.

Accounting-policy or data mismatches.

Insufficient mechanisms for reconciliation.

An overreliance on personal relationships or specific function “heroes”.
Undocumented interpretations of ambiguous terms in inter-company agreements.

Significant risks and frustrations

An incorrect implementation of a transfer pricing policy can expose multinational organisations to significant risks, including compliance and tax risks and gross inefficiencies - not to mention frustrations resulting from breakdowns in the execution chain.

So how do you achieve an efficient all-encompassing implementation of your company’s transfer pricing policy? We can assist you.

How PwC can help

Our experts can help you addressing transfer pricing as an E2E process. We draw together the wider chain of activities into a well-defined process, integrated between your financial and operational systems. For this, we bring together multiple internal functions to address and agree the required procedures and processes. It will identify the responsibilities of the various contributors in the process and identify which (existing) technology is used throughout the process. E2E transfer pricing translates the transfer pricing design into transfer pricing properly reflected in financial statements and tax returns, while the possible benefits reach beyond tax.

We will help you documenting the process in a Transfer Pricing Control Framework, allowing you to hold everyone that is to contribute to the process accountable for their own contributions. The whole process therefore does not increase the accountabilities of your tax organisation but clarifies where the accountabilities do lie within your organisation.

Possible benefits of E2E transfer pricing execution

Meeting reporting requirements in a more timely and efficient manner.
Reducing the work burden on finance resources for the computations and support required during tax controls.
Setting more correct transfer pricing at transactional level, reducing also indirect tax exposures.

Supporting communication with tax authorities at any level with as a result:
- reducing audit risks,
- decreasing time and costs of audit defence,

Improving efficiency in internal controls and inter-departmental coordination.

Developing a faster close process.

Standardising data collection processes and transfer pricing calculations.

Rationalising IT/systems investment.

Improving cash tax management.

Performing efficient transfer pricing scenario analysis.

Tailored-made approach towards any E2E project

PwC’s transfer pricing professionals have significant in-house experience and can help you to design or reinvent your E2E transfer pricing strategy. We always work towards a tailor-made approach that meets your individual needs. We can offer you also an integrated approach combining transfer pricing, indirect tax and tax reporting. Contact us to learn more about how we can help you adopt a strategic, E2E approach to your transfer pricing execution.