Importance of software solutions for transfer pricing

How do we see tax compliance?

In order to meet tax compliance requirements, useful documentation must be prepared within statutory deadlines or corresponding information must be provided within the scope of tax declarations. However, if one realizes that the Transfer Pricing (TP) Directive has not been (fully) complied with or that the target margins have not been achieved and/or that “far too much time” has been spent on data collection and validation, then one should intensively deal with the TP implementation and monitoring process. We are convinced that such a software-supported process can ensure that risks are reduced, opportunities increased and resources usage is significantly reduced. In the following, we outline the most effective software solutions in practice throughout the whole TP process.

What solutions are available?

TP implementation for service charges: We recommend that you use a central software solution with which you can enter all the figures for the calculation as well as the descriptions of the services and benefits of the foundation. For example, you can create journals, invoice attachments and documentation attachments and archive all data annually. This means that you no longer have to search for the facts when creating the TP documentation and the transaction matrix for the services can be generated with a single mouse click. During an audit of the company, you can export all the details and hand them over to the auditor without having to make any estimation corrections. We can both automate your existing Excel solutions as well as offer database solutions.

TP implementation for commodity transactions: In this area, we are cooperating with a provider who has developed an extremely powerful solution for over seven years that is unique. An almost fully automatic calculation of all TPs between all Group companies is achieved. Any TP method and even very complex value chains can be mapped. Neural networks are used to generate forecasts at the item level. The achievement of target margins depends to a large extent on the quality of the forecast. Transaction matrix and segmented profit and loss statements can be generated at the click of a mouse.

TP documentation: Our solutions serve the most efficient and flexible creation of Master Files, Local Files and CbCR. We work together with you on the same documents, depending on the desired division of labour. We can import data, collect it via questionnaires or enter it manually, centrally or decentrally, for small companies and also for DAX-30 companies. Our solution is the market leader, tested over 14 years and continuously developed according to customer requirements.

TP workflow management: By this we mean the possibility to collect and make available data and documents centrally (e.g. quarterly query of possible TP risks, audit status). Any processes with individual deadlines for internal and external persons can be defined. Status tracking and compliance overviews can be displayed. This creates transparency and enables tax risks to be identified at an early stage so that countermeasures can be taken.

TP Data Analytics: We can import large-scale data from ERP systems, perform regular (margin) analyses and visualize them so that you can see at a glance whether there is a need for action.

Conclusion

Also in the TP area, one should make use of the possibilities of digitization. The potential is enormous. Modern technology solutions can help taxpayers to comply with compliance regulations and create genuine benefit in terms of risk assessment and TP management.