Shorter payback period
OTP projects refinance themselves unlike most others. Compliance is an added bonus.
Net present value
The acquisition and implementation of any Operational Transfer Pricing (OTP) software solution or alternatively, designing and building the entire solution in-house, requires a reasonable budget as well as internal resources.
Recent EXA OTP projects reveal that customers considered a net present value (NPV) analysis useful to weigh up both project costs and benefits as a part of decision-making. Common parameters in the decision to invest in OTP automation have been the existing IC flows and volumes offset by the group entities involved, as well as their tax rate and general customs exposure. Analyses of detected variances to targeted arm’s length results in profit allocations as well as customs implications and income tax consequences have formed reference points for the amount that a group has to pay in the status quo on OTP year after year.
To introduce third-party TP automation software or software developed in-house requires purchasing a subscription or one-time license, or involves design/programming costs, customizing, any necessary custom development, deployment, and ultimately ongoing operation.
Once an OTP solution is live, variances in the distribution of profits are reduced, resources are freed up due to efficiency gains and tax advisory, and legal or other consulting expenses can be decreased because of fewer disputes. The release of existing tax provisions for TP risks has been another criterion considered by EXA customers when evaluating the OTP project refinancing.
By comparing both scenarios above, it is now finally possible to reliably assess the level to which an investment makes sense, not only from a compliance point of view, but also from a purely economic standpoint.
Even investments in TP technology have a return on investment (ROI):
Empower teams with IT
Manage TP faster, more accurately, and with greater visibility
Centralize and standardize
Apply TP policies at the lowest level
Enable real-time analytics and simulations
Support decisions and action triggering
Process hundreds of millions of finance records
Calculate new TPs in seconds
Quickly adapt to new legal requirements
Reconfiguring TP data model and reports
Support analysis and day-to-day decision-making
Manage data centrally
Huge Time Savings
Prepare data for TP documentation faster