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Chemical Manufacturing
Finland
Kemira has cut hundreds of hours of work by automating transfer pricing calculations and now monitors profit levels in real time with Aibidia’s technology.
Kemira is in many ways a forerunner among European MNEs regarding the extent to which they utilize automation and robotics throughout the group in, for example, finance, supply chain management and customer service. In 2019, Kemira decided to further extend their use of automation to operational transfer pricing and transfer pricing compliance processes. “We did transfer pricing calculations manually, and because we have 62 legal entities in 40 countries, it was a lot of work for the tax team, the finance team, and the local organizations”, says Marika Nordlund, Head of Taxes at Kemira.
Before starting their transfer pricing automation project, the Group already had two essential prerequisites for automation in place. Firstly, Kemira had centralized business models, business processes and harmonized transfer pricing policies since early 2010s. Secondly, one common SAP system was globally in use in all but one of the Group’s operating countries. “Implementing technology and automatization in transfer pricing processes was a natural step for Kemira”, says Marika.
Kemira’s primary goal was to automate segmented P&Ls, LRD fee, agency fee, service fee and royalty calculations, as well as prospective resale minus pricing. In return, this was expected to mitigate tax, customs and VAT risks, enable real-time monitoring of intercompany transactions, save work hours, and provide more aligned statutory financial and tax reporting. Kemira compared several vendors and eventually requested proposals from three of them.
“When we were selecting the vendor, it was a key criterion for us that the vendor had the capability to customize the solution to suit our needs and business models. We wanted the solution to cover our entire transfer pricing set-up from sale of goods to tolling and agent models, royalties, service fees etc. These include complex set-ups which cannot be handled by standard solutions. Here, Aibidia’s flexibility and customization possibilities clearly stood out”, says Marika.
Kemira and Aibidia then worked closely together throughout 2020 to build a tailored operational transfer pricing tool, with the business go-live date in January 2021. Throughout the process, Aibidia’s flexibility and strong work ethic have consistently impressed Kemira.
“We truly co-developed the solution together with Aibidia and got what we were looking for. The core team that was involved in building the TP tool at Aibidia was really good. Aibidia has a high work ethic and they have done their utmost to make the solution work for us”, Marika commends.
"The way we manage transfer pricing and intra-group invoicing has been completely transformed. It's more contemporaneous, more real-time, and we save a tremendous amount of work hours."
Today, Kemira’s operational transfer pricing processes are automated and managed with Aibidia’s TP tool. Calculations are made and price lists created automatically by the solution utilizing advanced forecasting methods, with robotics used to send invoices and make entries to SAP automatically on a monthly basis. This has dramatically changed how Kemira’s tax team manages transfer pricing processes, increased transparency and resulted in saving hundreds of work hours in various functions.
Marika has also been pleased to see how the members of Kemira’s tax team are now better equipped to focus on truly value-adding activities instead of searching for data and performing manual calculations. They are actively utilizing the tool for monitoring purposes, deriving insights from the data, and further developing the tool together with Aibidia.
“There are complex calculations inbuilt to the solution and the tool is obviously sensitive to changes both at our end and at Aibidia’s end. We have recently implemented a business model change in APAC and are taking SAP S/4 HANA to use, so we continue to work closely with Aibidia to implement these changes to the TP tool.”
We have a small tax team and using automation is the key in an organization like ours. We couldn't have this kind of an organizational structure if we had a high level of manual operations.
Kemira has also utilized Aibidia Country-by-Country Reporting and Analytics solution for several years and is currently taking Aibidia Transfer Pricing Documentation solution to use. With these solutions, the tax team will be further able to eliminate considerable manual workload related to transfer pricing compliance reporting. For example, financial data required for local files is readily obtainable from Aibidia TP tool. Marika considers these improvements essential in how they are managing the future.
Marika also sees other areas where Kemira’s tax team would benefit from automation:
“We are now well advanced in transfer pricing automation, but the level of automation is quite far behind for example in tax reporting or tax declarations. We are a listed company, and we have certain reporting requirements. Of course, we hope that similar type of technology would be available also for these kinds of tax reporting purposes.”
