Designing effective Transfer Pricing Policies

Your transfer pricing policies are only as effective as the data that underpins them. Some struggles I see from tax function owners responsible for implanting TP policies:

• Accounting differences between related buyers and sellers.
• ERP system limitations.
• Reliance on management financial statement results that don't track tax results.
• Opaque and/or irreproducible processes (often intertwined with "key person risk").
• Selective or ad-hoc adjustments to transfer pricing data.
• Overly complex and administratively burdensome policy design.

The good news - Eide Bailly has the expertise to help mitigate these challenges. A few examples:

• Stay in lockstep with local tax functions.
• Beg, barter, or bribe your way into a seat at the table in ERP implementation discussions.
• Always come back to the question "how does this tie to my tax returns?"
• Document processes and (if possible) build in redundancy.
• INSIST on practical support from the service provider who designed your transfer pricing policies.

Tax and transfer pricing can't and shouldn't happen in a vacuum. Buy your Financial Systems, Financial Planning & Analysis, and Accounting colleagues a coffee and spark that cross-functional flame.

Chad Martin directs Eide Bailly's Transfer Pricing Services practice.