Following the introduction of the OECD BEPS initiative, it became clear to the Volvo Group Tax Team that the added compliance burdens stemming from these reforms would require a change in the team’s way of working with transfer pricing.
“The new global documentation requirements were really the starting point in our looking for something new to help us manage transfer pricing compliance,” says Viktor Nilsson, Tax Manager in Transfer Pricing. He continues that, “Adding the number of new members to the team that would be required to be compliant was never really an option, therefore adopting new technology was really the only other path forward”.
In their search for transfer pricing technology, the Volvo transfer pricing experts identified the following challenges that any new piece of software would need to help them with:
- Remaining proactively compliant with the transfer pricing documentation burden without increasing internal resources; and
- Centralizing the documentation process to maximize control, intragroup alignment and documentation quality.
The initial investigation into new products did not go smoothly. “We tested and tried a few solutions and platforms out, the testing was time-consuming and tiring, but we realized that none of the options were going to work for us”, Viktor says. “After a while we essentially concluded that we will not find anything. I mean, it’s better to do it manually than do it with bad technology”.
However, after agreeing to an introduction with Aibidia, Viktor and the Volvo transfer pricing team immediately appreciated the different way of doing things:
“Aibidia asked us ‘What would you like to have in a documentation platform’ instead of ‘This is what we offer’, and that’s just a fundamentally different way of doing business and that’s something we’ve been very happy with.” Importantly, the technical solution offered by Aibidia to meet Volvo’s needs was also, as Viktor notes, “…exactly what we had been looking for. It was the first time that we ever saw something that was in line with the thinking that we had.”
“A fundamentally different way of doing business.”
- Viktor Nilsson
It did not take too long for the Volvo team to be convinced and make the decision to move forward with Aibidia as their transfer pricing technology provider.
Onboarding with Aibidia
After making that initial decision, the process to get onboard with the Aibidia Platform was swift, efficient and painless.
“The onboarding process is the most critical part of starting to work with a platform like this, and I think that our onboarding process at Aibidia was much smoother than expected”, Viktor says.
He credits their very positive onboarding experience to two key factors:
- The Volvo transfer pricing team was internally prepared to digitalize their transfer pricing, with good data collection processes and compliance documentation already in place; and
- Aibidia’s clear onboarding journey and constant customer support.
And as Viktor notes, their transfer pricing team spent less time in the onboarding process than they would have spent doing the documentation manually.
“So, if you look at it from another perspective, that you do this one-time project and create all of the building blocks in the platform that you need to be able to build your reports, then you only maybe need to change minor things from year to year”, Viktor says.
In other words, the time savings have been immediately clear to Volvo.
It also helps that the Platform is “…very easy to use. I like the interface and structure—I think it is logical and it makes sense”, Viktor provides.
The nature of the relationship between Volvo and Aibidia has also been an important factor in how quickly their digital transfer pricing project has come together. Viktor provides that they came to realize in their search for a vendor that they were looking for something closer to a business partner with whom they could engage in mutually beneficial cooperation; and they found that with Aibidia. “I think the cooperation has worked very well. The dialogue in particular has made our experience so successful—we feel listened to and that’s a very important factor”, Viktor says.
Harnessing the Power of Technology
Now that they have been onboarded and have been using the Aibidia Platform for about a year, the Volvo transfer pricing team has seen immediate, tangible benefits. They are now spending less time creating transfer pricing documentation.
Contributing to the time savings has been the structure afforded by Aibidia’s Platform. As Viktor notes,
“It is very helpful to get a set structure. As you can imagine, we have millions of intercompany transactions and the question is, ‘How do we categorize them?’ And we are very happy with doing it the way that the Platform guides us to do it.” Viktor continues that “It’s a hidden advantage that I think many companies would benefit from, that you have something telling you what data you need to collect and in what format so you can feel safe regarding your collected data.”
“We have now increased the control, alignment and the quality. So, so far we are very happy.”
- Viktor Nilsson
Further, Viktor finds the FAR analysis section of the Aibidia’s Platform to be “genius”.
“Aibidia’s Platform allows you to align your FAR analyses across local files so that you don’t open a local file from a country and it’s a new way of doing things every time. Here you get everything the same way and a set structure and it provides an excellent starting point when having conversations with tax authorities.”
At the end of the day, the concrete benefits of digitalizing their transfer pricing with Aibidia are clear to the Volvo transfer pricing team. “We have now increased the control, alignment and the quality. So, so far we are very happy”, Viktor says. “We are now managing most of our entities in the Aibidia Platform without increasing the resources and I think we have therefore succeeded then with our initial goals.”
Looking into the Future
What then of the future of digital transfer pricing at Volvo? In the short term, Viktor says that “we are looking at the possibility of moving forward with documentation for regions other than Europe.”
But generally, the Volvo team remains open as to the future possibilities available to them with technology. “The areas for future digital change kind of present themselves and sometimes you go ‘Ah!’, this is how we can improve this process and it's hard to sometimes think about that before. So, I think this idea of working in partnership-type relationship where we help each other with digital solutions is a great path forward.”
“I think that the step to start exploring technology is unavoidable, it is something everybody needs to consider.”
- Viktor Nilsson
And finally, as to other companies considering the leap into transfer pricing technology, Viktor has some wisdom to share.
“With the existing and increasing future compliance burden in our field, I think that the step to start exploring technology is unavoidable, it is something everybody needs to consider. The first step is always the hardest, but once you have done that you instantly open up new possibilities—but you need to take that first step, it’s worth it.”