ITR Transfer Pricing \ Jun 2020 \ Dr.-Ing. Frank Schöneborn, Divya Vir Rastogi
Frank Schöneborn and Divya Vir Rastogi of EXA AG discuss how the development of state-of-the-art operational Transfer Pricing solutions are enhancing the day-to-day work of tax professionals.
When it comes to transfer pricing (TP), data collection for the documentation is usually a manual and painful process every year. Inconsistencies are commonplace, and an active steering of profit allocation along the global value chain seems to be fantasy. But nowadays, a new SAP (ERP, S/4HANA) add-on solution can help.
Tax experts have been struggling with data collection for TP documentation for many years. While it does not often take long to describe the TP system in master and local files on functions and risks and to select appropriate transfer pricing methods, in audits, ultimately it depends on the figures.
American engineer William Edwards Deming’s famous quote: “Without data, you are just another person with an opinion” also applies unreservedly to transfer pricing.
In most cases, things start to get tough when it comes to compiling the figures in the documentation: the financial data available centrally in accounting and finance does not match the tax-related transfer pricing system in terms of structure and granularity.
Poor IT systems or the IT landscape are quickly accused of being the cause and the situation shows no signs of improving. So what exactly is the problem?
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