Many multinationals have been turning to business intelligence tools such as Microsoft Power BI, SAP, and Tableau, to help them process the large amounts of financial data necessary for transfer pricing compliance. In this article, we discuss how business intelligence tools can be used for managing transfer pricing compliance and better assessing potential risks.
Using Business Intelligence Tools For Transfer Pricing
Business intelligence software is designed to help companies retrieve and analyze data. These tools typically feature visual dashboards with filtering capabilities that offer an easy way for companies to look at large amounts of business data.
For transfer pricing purposes, tools like these offer multinational corporations a “big picture” view of data for all the countries where they do business. With a visual dashboard, companies can see a full list of legal entities with a number of different filtering options to “slice and dice” data. (Tweet this!)
For example, using business intelligence software, you can set up a video dashboard that filters transfer pricing data by legal entity and breaks down profits per employee per country. It can also be designed to allow for the ability to filter data by tax rate, company function (like sales/marketing or manufacturing), and transaction type. This level of detail—and the ability to filter data and look at it in different ways—is incredibly useful for preparing annual country-by-country reports. Business intelligence tools therefore can help multinationals evaluate the relative audit risks and prioritize compliance documentation.
In addition to being beneficial for compiling transfer pricing reports, these tools are very effective for looking at data in different ways and spotting anomalies that might suggest data errors.
Visual dashboards are also helpful for conducting country risk assessments, as they allow users to examine various risk factors associated with countries where they do business, review different data subsets, and present comparable risk data. They can, for example, be used to evaluate how the tax authorities may look at CBC data based on recently issued OECD Guidance.
Gain access to a templated work plan with task lists and timelines to help you manage the transfer pricing compliance process successfully.
Potential Challenges To Consider
There are a couple potential pitfalls for multinationals to consider when using business intelligence technology for data visualization and reporting.
- One of those considerations is the ability to adapt to changes. One common issue is locking into an inflexible platform that may be difficult to change as your company expands and evolves. When you’re selecting a business intelligence solution, look for one that has the ability to grow with your organization to ensure it will address your long-term needs.
- Another challenge associated with business intelligence tools is enabling the sharing of data. Corporate restrictions on who can use technology and how organizational data can be shared can sometimes make it very difficult for outside consultants to access data needed for reporting purposes. The challenge lies in finding a way for corporate rules and software to work together to ensure external transfer pricing consultants can get access to the software and the company's financial data.
Gain Expert Guidance On Global Compliance Requirements
Business intelligence tools are a useful resource for transfer pricing data management—but they can only do so much. Transfer pricing consultants can help you make the most of this software, bringing the extensive knowledge and experience necessary to navigate today’s complex global business environment.
Valentiam comprises industry thought leaders with the know-how and expertise to ensure regulatory compliance, and mitigate your multinational organization’s tax risk. Get in touch to discuss your company’s transfer pricing challenges and innovative solutions to address them.