Given the overwhelming complexity of today’s tax landscape, automating your operational transfer pricing process is essential.
With the right software in place, your tax department can achieve new levels of automation, risk mitigation, cost reduction, transparency and operational efficiency.
While the day-to-day benefits of transfer pricing software are clear to many tax professionals, your CFO may need a bit of convincing before approving the investment.
To help you garner support, here are three selling points that are sure to catch your CFO’s attention and boost the likelihood of getting buy-in on a transfer pricing software solution.
1. Avoid reputational damage and fines
We all know that when tax goes wrong, it makes the front-page news.
The OECD’s international standards on tax transparency have ushered in a new era. With tax authorities around the world increasing their focus on transparency, audits and fines have increased. Many legacy processes are unable to withstand the increased scrutiny, betraying high levels of unconscious non-compliance.
Without a reliable transfer pricing process in place, your business may find itself not only subject to time-consuming audits and costly fines, but serious reputational damage that results from not paying your perceived fair share of tax in the jurisdictions in which you operate. From the CFO’s perspective, avoiding fines and negative press coverage are perhaps the most powerful reasons to invest in transfer pricing software.
By codifying your transfer pricing policy into an automated process, you’ll have an audit trail of activity that makes it much easier to stay in compliance, ensuring your company gets transfer pricing right on time, every time.
2. Optimise your effective tax rate (ETR)
Tax departments often struggle with working out their effective tax rate (ETR). This can have a significant impact on business results. Transfer pricing software enables your tax department to be proactive by modelling scenarios and optimising the ETR.
When your tax department can frequently monitor your company’s position through operational transfer pricing software, you can reduce the risk of period end issues (i.e., late filing or large avoidable adjustments). These insights also enable timely optimisation of policy, driving better business decisions.
If your business strategy is not aligned with tax planning, your company could end up with missed opportunities and unnecessary costs. With transfer pricing software, your tax department can achieve and maintain an optimal ETR and ensure all available tax deductions and incentives are utilised. This is a compelling selling point for the CFO.
3. Leverage time savings for tax strategy
When you automate your transfer pricing processes, the time spent moving data between systems and checking Excel outputs is eliminated. With comprehensive audit tracking and an increased level of assurance, you can also reduce the time spent with your auditors. This frees up time for tax professionals to shift their focus to more meaningful work that adds value to the company.
Today, high-performing businesses use tax as a centre of forward-looking intelligence that informs strategy and drives growth. Instead of manual data maintenance, transfer pricing software allows the tax department to put their wealth of experience to use driving business-wide improvements.
Elevating the tax department as a provider of accurate and actionable financial information for the wider business is crucial in a world where tax transparency is centre stage—and transfer pricing software can enable this transformation.
Preparation is key
Now more important than ever, operational transfer pricing technology is essential. Reporting requirements and scrutiny will only increase in the years ahead. With an automated process, you can compile, analyse and manage your transfer pricing documentation for tax authorities as part of a consistent, customised global process.
If your tax department is serious about an investment in transfer pricing technology, take the time to understand what’s important to your CFO and arm yourself with answers to questions that will be top of mind. If you do, you’ll overcome any early resistance and build a solid foundation of confidence in the undeniable benefits that will empower your tax department and the overall business now and in the future.