“Automating an Excel is not a solution” was one of the key statements from Aibidia’s Operational Transfer Pricing (OTP) workshop at the TPMinds Technical Workshops Day this year.

And it’s only one of the insights shared during these hands-on workshops and various panel discussions at TPMinds 2024.

From discussing regulatory changes to leveraging advanced tech and exploring AI, TPMinds this year brought together top TP professionals and thought leaders, covering various topics, from the latest trends to the challenges and opportunities for innovation.

A major theme was the shift towards digital transformation in transfer pricing. Experts emphasized leveraging technology to automate manual processes, making TP professionals and organizations more agile and improving control over TP practices.

But let’s examine in more detail some of the key takeaways from this year’s event and our OTP session.

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1. The gradual shift from Excel to automation with technology

The days of manually managing thousands of Excel spreadsheets seem to be coming to an end. This year’s TPMinds panel discussions highlighted the growing importance of adopting technology to automate processes within transfer pricing.

Organizations are increasingly looking to update their TP and tax functions to better control tax processes and manage the risks involved. But one of the main challenges to this is data—how do you ensure the data you use is accurate and reliable?

This is where Excel seems to come in.

The hidden costs of relying on Excel — whether it’s the time spent on manual tasks or the struggle to find the right data across teams and departments — are becoming too significant to overlook. And the possibility of errors is too high. This, in turn, poses risks to audit investigations and compliance.

Considering that 46% of organizations are still relying on such traditional tools for transfer pricing, there is a significant risk of falling behind in an environment where regulations are constantly evolving. Simply put, managing processes manually will not be enough to meet the growing complexity of today’s compliance and business needs.

However, successfully transitioning to a more digital approach involves more than just implementing new technology. It requires aligning people and TP processes to effectively manage the change that comes with it.

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2. Governance is key

Globally, tax authorities have intensified their audits, with 53% of companies reporting increased tax scrutiny. Access Aibidia’s exclusive Industry Report 2024 to gain more insights like this.

The global drive towards tax transparency continues to top the agendas of intergovernmental policy-making organisations, such as the OECD and the European Commission, tax authorities, large corporates, and even institutional investors.

The growing focus on governance is now even more apparent with the shift towards more forensic, value-chain-centered audits, where authorities demand more detailed evidence rather than simple explanations. That’s why addressing the underlying data challenges is important to navigate this increasingly complex landscape and maintain consistent tax compliance.

It is equally important to have a robust and strategic approach to managing tax risks and responding to such challenges. This comes in the form of establishing a clear and unified understanding of group strategies, policies, and operations in reducing tax risks.

Technology can certainly play a major role in enhancing these efforts by ensuring governance and providing great visibility and control, leading to the minimization of compliance risks.

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3. Aibidia’s approach to Operational Transfer Pricing (OTP)

Operational Transfer Pricing (OTP) was a major focus, and our workshop on automating OTP highlighted several key points.

First, different organizations are at different stages in their OTP journey.
While less than half of the workshop participants have defined OTP processes, including price setting, monitoring, and adjustments, many acknowledged that these processes lack structure and proper management. We share our insights on tackling your OTP challenges in our latest blog post here.

Second, TP teams are primarily focusing on designing policies, defending them in audits, and documentation. However, managing the entire end-to-end process - implementing strategies, controlling transactions, and documentation - is equally important. Technology now allows for more efficient management of this process, reducing reliance on Excel and offering better control.

Third, transforming OTP with purpose-built technology is achievable. Aibidia’s Operational Transfer Pricing Management (OTPM) solution addresses the data challenge by providing an overview layer that integrates with current ERP setups, pulling data from multiple sources, combining it, and transforming it into a TP-ready format using Aibidia’s unique taxonomy.

This helps automate the entire OTP process - from automatic P&L segmentation and price setting to complex calculations - enabling data-driven strategic tax decisions across all business entities.

Johannes Kaarnijoki, Co-head of Aibidia’s Operational Transfer Pricing solution, states:
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“With Aibidia OTPM, users can take control of their operational TP processes, with an easy-to-use interface where the end users can configure business and TP logic. This simplifies and speeds up the process when changes are needed and reduces reliance on IT and/or external service providers, and ultimately, helps our customers keep up with changing business requirements.”

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Here’s a sneak peek of how that looks like in practice:

If you want to find out how we can help automate your OTP processes, contact our team and get a personalised Aibidia OTPM demo.

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The path ahead for Transfer Pricing

The insights shared at TPMinds this year emphasize the critical role of automating TP processes and using technology to manage transfer pricing effectively. The focus on digital transformation, regulatory compliance, and data-driven decision-making will continue to shape TP strategies of leading companies in the years ahead.

As with any journey, success in transfer pricing requires the right mix of technology and processes to help organizations better navigate the complexities of modern transfer pricing.

Ultimately, the future of transfer pricing isn’t just about keeping up - it’s about leading the way.

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