Don’t take a tax compliance risk! Manage transfer prices in SAP PCM

Why is Transfer Pricing important?

The recent economic crisis has motivated tax authorities to look closer at maximising tax incomes and inter-company transactions are a key area of focus. Tightened regulation and reporting requirements are already starting to take place, notably recent standards published by the OECD and European Commission, including Base Erosion and Profit Shifting (BEPS). How can SAP PCM help with this?

What’s the pain?

Transfer Pricing (TP) processes in most companies still rely wholly on disparate spreadsheets. These are prone to failure under normal operations but become unsustainable with continuous business change.

The majority of TP problems can be grouped into a few discrete categories:

  • time spent on data transformation rather than analysis,
  • inability to trace allocations/calculations to source operating company expenditure,
  • inadequate corporate governance due mainly to inefficient processes and reporting.

The result is costly compliance penalties, reputational damage, and tax leakage.

SAP PCM – how can it help?

For many years Profit& consultants have been helping clients to use SAP PCM to identify profitability improvements including, products, customers, channels profitability, and process optimisation. The tool is the best in class for enterprise-wide financial modelling.

Based on the most recent experience, we have connected the dots between unmet needs of TP departments and the great benefits of SAP PCM. The integration with multiple data sources and reporting layer, optimised allocation engine, allocation paths easy to set and maintain…  makes it a perfect choice for TP processes. One of our current clients, a global pharma company, will have immediate process benefits from automatic calculation of over 8000 transfer prices for product and services, and will gain even greater benefits by being able to run multiple scenarios for what if analysis, something impossible to do using spreadsheets.

SAP PCM – Register for the webinar

Profit&, in collaboration with itelligence, will be discussing how SAP PCM can address TP issues on a webinar on 27th October at 2:00pm. Don’t miss out! Register here.

Guest author: Pawel Kowalski

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