For those who specialize in Transfer Pricing or work closely with those who do, do most MNEs implement operational transfer pricing (OTP) technology?

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No. We just set IC pricing.

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We’ve looked at the tools being sold, and for intercompany sales, a target mark up or discount is layered on a market price or cost base. From there, we have segmented financials to test operating margins we can pull out of S4 to see if adjustments are needed. Honestly, what’s being offered in the market just isn’t worth the time/expense to install/implement and monitor vs what we do ourselves.

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Senior Manager 1 - do you or your clients use an ERP system to execute the TP policy, especially if the MNE has a high volume of IC transactions?

Different companies operate differently but most ERP systems still can’t handle basic TP. As a result, all the calcs are done manually or through manual models which are built and tweaked. On the consulting side, we will provide ranges for certain transactions and then the client implements. On the client/in-house side, they will take those ranges, develop an i/c policy, pull the financials to manually calculate or run the model, and issue internal invoices/ensure journal entries are booked.

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