fbpx Skip to content

Why Proactive Management of Transfer Pricing is Essential

insightsoftware -
May 4, 2023

insightsoftware is a global provider of reporting, analytics, and performance management solutions, empowering organizations to unlock business data and transform the way finance and data teams operate.

Proactive management of Transfer pricing

Avoid Costly Accounting Adjustments With Longview Transfer Pricing As Your Operational Transfer Pricing Solution.

Multinational enterprises (MNEs) have become a target of tax authorities seeking to limit the use of transfer pricing strategies to reduce taxable income. Therefore, it is no coincidence that tax executives consistently name transfer pricing as a top tax concern.

As an MNE with a complex cross-border transaction structure, your transfer pricing policies create intercompany accounting challenges that are unique to your business. As your business changes and faces increasing demands from the global regulatory environment, you need an operational transfer pricing (OTP) strategy that flexes with your needs.

The Importance of Operational Transfer Pricing

Deloitte defines OTP as: “the end-to-end process of ensuring that the transfer pricing policy is correctly reflected in the financial statements of legal entities.” OTP focuses on more than compliance, also covering data integrity, efficient integration with other key functional areas, and reporting transparency. An incomplete OTP strategy can lead to reporting errors that can cost you dearly.

For example, the Parquet National Financier (PNF) recently found that royalty increases enabled McDonald’s France to shift profit abroad and avoid paying taxes. Found to be in violation of tax laws, McDonald’s was issued a public interest fine in the hundreds of millions.

This case highlights that a single oversight during the transfer pricing process can lead to enormous penalties. For this reason, it is important to know what is expected of your transfer pricing process, the challenges you might face, and how to overcome them.

Growing Transparency in Transfer Pricing

While automation has reduced the workload associated with transfer pricing, it has also increased the transparency of data and public scrutiny of numbers.

Changes like country-by-country reporting, DAC-06, SAF-T have considerably broadened the range of information available to tax authorities, and the speed they receive it. Also, there is an increasing focus by tax authorities on how transfer prices are set, not only the outcome of the pricing.

As tax authorities have never been in a better position to perform transfer pricing audits and to process information, you must take control and ensure that your transfer pricing policies work. For this reason, it is crucial to have the right operational transfer pricing processes in place to ensure the proper checks and balances.

An Operational Transfer Pricing Solution to Meet Your Needs

This year, your tax department has likely been challenged to do more with less and to achieve this you need the right tax and transfer pricing solution. Don’t wait until year-end or an internal audit to make large retroactive adjustments. Integrate a reliable, transparent solution that leaves a rock solid paper trail and highlights data errors before they have impact.

Data Collection

Cloud-based operational transfer pricing software allows your tax team to easily gather your company’s worldwide data. Even if you’re still using older enterprise systems or Excel spreadsheets, new software solutions let you compile your company’s tax data on a single platform. With all of your company’s data collected within a single source, you can streamline your tax activities, have confidence in your data, increase intercompany transparency, and reduce operational costs and risk.


Transfer pricing software provides a robust platform that brings you a complete picture of your company’s tax data. This allows you and your tax team to improve compliance by helping you better understand the story your data is telling tax authorities. Benefits include:

  • Standardized protocols and stronger controls
  • Improved traceability and audit trails
  • Lowered risk of transfer pricing audits by tax authorities


Unfortunately, some companies still perform many tasks such as data entry and calculations manually. But relying on error-prone manual processes for complex and data-intensive tasks opens your business up to additional risk. Persistent data errors can lead to inaccuracies and variances in your transfer pricing process.

Automating key steps in the transfer pricing process may be the single most important way to increase your efficiency. Advanced operational transfer pricing software that employs automation will:

  • Improve your data integrity
  • Increase your turnaround speed
  • Provide fast yet precise processing, even with large volumes of data
  • Allow you to collect and analyze records to create operational transfer pricing reports

Real-Time Adjustments

Having all your tax data in one place represents a powerful tool. And with cloud-based software, you can stay up to date with real-time adjustments. With the ability to view and manipulate real-time data quickly, you’ll ensure that your operational transfer pricing processes are relevant and accurate without having to wait until the end of the close cycle.

Profitability Analysis

Advanced software solutions allow you to explicitly define profitability ranges and include profit goals. And with increased data visibility, you can adjust your transfer pricing strategy as the market environment and tax regulations change.

Make the Change in Your Transfer Pricing with Longview

A self-serve system like Longview Tax ensures that your reporting is managed by your financial experts who understand the data and general ledger structures. When your tax team has total control over reporting, they will naturally build confidence in the numbers they share with stakeholders. Periodic and ad hoc reporting will be faster, conclusions more nuanced, and the strategic value to your organization more apparent.

With scalable data management capabilities that can organize and segment large volumes of data, Longview Tax uses a single source of truth to ensure the data you’re using is the right data. These automated calculations that offer drill down capabilities reduce your need for manual data manipulation, freeing up more time for you to run segmented profitability analyses, and model potential pricing changes.

Using Longview Tax as your OTP solution is your best bet to take on the increasingly complex world of transfer pricing. By creating alignment between planning, implementation, and compliance, you will be confident in your transfer pricing process from the get-go.

Find out more about how you could use Longview Tax from insightsoftware to reshape your tax function. Book a free demo.