Operational transfer pricing is the end-to-end process of ensuring that the transfer pricing policy is correctly reflected in the financial statements of Legal entity.

Alternatively, OTP can be considered as being the accurate, transparent and efficient implementation of transfer pricing policies in the books and records of a company based on quality data and robust processes and controls. Achieving quality OTP outcomes helps provide confidence that agreed upon transfer pricing policies are actually happening on the ground, all around the world.

Download our placement to find out more

OTP often involves navigating complex data across varied systems, leading to potential discrepancies in financial statements. Evolving regulations necessitate greater oversight, highlighting the urgent need for robust solutions. Read more in our article.

In today's regulatory environment, timely and accurate reporting is crucial. Enhanced requirements enable tax authorities to access comprehensive data rapidly, necessitating precise and prompt implementation of transfer pricing policies. This proactive approach helps prevent year-end adjustments and regulatory scrutiny.

A well-structured OTP framework is essential to overcome these challenges. Automation reduces manual efforts, lowers operating costs, and enhances accuracy. This leads to improved analytics and reliable reporting, ensuring alignment of transfer pricing policies with strategic goals.

We convert challenges into opportunities through tailored solutions. By designing streamlined processes that align with your IT vision, we help you transition from mere compliance to strategic control. Our approach involves mapping current processes, identifying gaps, and crafting an efficient target state. 

Whilst there are many different options, Deloitte uses a standard framework approach when helping its clients with improving their OTP processes can help to guide an organisation’s TP team to make TP automation a success, using the following steps:

• Map
  First, mapping out current processes, including identifying all key interfaces with other stakeholders and identifying people responsibilities
• Gap
  Identifying gaps or Issue in the current process, then determining which parts of the process to automate and identifying any potential challenges in effecting change
• Design
  Having established this baseline, the next phase is to design the target state for the OTP model going forward. In this phase, it would be established who is best Place to perform each task, determine target timelines and assess what tasks are low value-add or repetitive which could be automated
• Transition
  Transition from current state to target state would be determined and evaluated. This involves creating a transition plan and managing change activities such as handing over existing tasks to new process owners, defining new RACI matrices and Update the target state to take into account practical aspects encountered during transition
  

We offer half day and full day workshops with you and the relevant key stakeholders within the business to walk you through the steps above and ultimately set out the roadmap in order to achieve your goals.

Improving your OTP framework has many benefits, most notably:

• It has the potential to significantly reduce operating costs, given a combination of factors, including; reduction in payroll due to lower manual effort required, lower indirect or second order tax effects, lower tax penalties due to increased accuracy etc.
• Automation significantly reduces manual efforts and process turnaround time, reduces the risk of manual errors through process controls and increases traceability and audit trails.
• Clearly defined and established OTP processes more easily cope when transfer pricing team members change.
  More impactful analytics and reporting through data visualisation.
• Higher accuracy and reliability in external reporting.
• Significant time saving which can be spent on tax strategy and analytics.