Transfer Pricing & Digital Business Model | GTP GlobalTransferPricing
Digitalization is now a ubiquitous phenomenon in today’s business world. In multinational corporate groups and other mid-sized organizations involved in international business and cross-border transactions, almost every inhouse employee and expert of external business partners are established with digital workstations and integrated IT systems. Such digital integration is deployed for intra-group processes between staff as well as for exchanges with external stakeholders like suppliers and customers, service providers, strategic partners, and even governmental authorities.
Hence, almost all data and information required for managing a transfer pricing system and the inherent tax compliance work is already digital – today and, of course, tomorrow. For example, product engineering solutions (e.g. GIS), systems of Economic Resource Planning (ERP), document management systems and enterprise content management systems (ECM), collaboration platforms within the group, external database resources, and the like, generate large datasets. Transfer pricing managers may directly align to such data sources for their routine work. And in Art. 9 of the OECD Model Tax Treaty, in Germany for example Art. 1 Par. 2 of the Foreign Tax Act, the term “related party” was recently even expanded beyond the role of shareholders and managers into the spheres of having a stake, having influence, and being a member of business network.
The GTP® TEAM has aligned its practitioner model to this development. The GTP® MANAGER makes use of such data and information sources to the extent relevant for transfer pricing, international tax issues, and compliance management. The GTP® MANAGER is now deployed as a solution on digital transfer pricing management in form of a group-wide platform in which each stakeholder can be added with dedicated user rights and roles.
Interestingly, practical cases show that resources on manpower and IT necessary for such a “digital transfer pricing approach” of the multinational group are of a very manageable amount. Sometimes the size of this part of the project is even negligible relative to the group’s size of revenues and the opportunity costs of “traditional management” of transfer pricing between related parties.
The new features of the GTP® MANAGER do supplement what is often lacking in practical cases of managing the group-wide transfer pricing system, i.e. the communication and the collaboration between internal and external stakeholders and the consistency. Such stakeholders are, among others, the headquarters’ decision-makers, representatives of local related-party units, accountants, other experts of the organization, external tax experts, the representatives of the tax authorities, auditors, and the like. To manage digital business models and the inherent transfer pricing system, such stakeholders will have to be enabled to access, read, or contribute to the transfer pricing model. Modern solutions like the GTP® MANAGER exactly facilitate such interaction. Put it in other words, it’s not only about having the Master File and the Local File but about how to generate, modify, and process such a transfer pricing system.
More information can be found at www.GlobalTransferPricing.com.