accountants daily logo

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

A turning point for transfer pricing?


Global crises and uncertainty have shaken up attitudes on related party transactions.

By Sharan Samra5 minute read

Most transfer pricing specialists are probably not looking to their organisation’s information technology department for career advice. For many, the focus has been on compliance, documentation and ensuring their organisation holds a solid transfer pricing (TP) position based on the environment they forecast.


But that was before the last two years changed everything.

COVID changed the way the world did business and global shocks since, such as the Russia-Ukraine conflict – have amplified the sense of uncertainty. The regulatory environment shifted as the OECD guidelines evolved and local authorities, such as the ATO, moved to align with them.

The focus has become less on compliance. It has shifted to the commercial purpose and behaviour behind a company’s transactions.

“Over 40 years ago, somebody coined the word ‘CIO’ [chief information officer],” said Kevin Kiyan, global co-leader of transfer pricing at Andersen LLC, speaking at the recent TP Minds Conference in Sydney.

“Now you think about it, every multinational business has one.”

“We’re not suggesting that there will be a chief transfer pricing officer, but there is enough evidence that integrating transfer pricing into the strategy of the organisation might be the way forward.”

Benedicte Olrik, managing director, transfer pricing at A&A Tax Legal Consulting, the collaboration firm for Andersen Global in Australia, explained this further. 

“IT started as a compliance function that was only bought to the decision-making table when things were exploding,” she said.

“TP has been much the same. I’ve seen clients who previously had solid TP positions, now find themselves in risky positions. As the world changes, the function will need to step up and take a more strategic and proactive approach in the organisation.

“Transfer pricing has a lot to learn from both the journey of IT and from the pillars of change management.”

When TP documentation rules came out around 20 years ago, the initial focus for the function was on compliance and reports. From there the prerogative changed on restructuring organisations to take advantage of things like intellectual property regulation.

It then shifted to advance pricing arrangements and audit protection, and TP was bought in-house. Transfer pricing is now at the helm of a natural yet transformative evolution, one where it needs to be imprinted into the operations, processes and conversations of an organisation as it responds to uncertainties.

“There will always be uncertainties,” said Mr Kiyan. “What a crisis reveals is just how prepared some companies are to deal with changes. It then reveals how integrated – or not – the TP function is.”

Ms Benedicte said A&A was working with clients to build a slightly different approach.

“In liaison with our colleagues at Andersen, we have tried to change the mind-shift from reactive to proactive by developing a model that showcases what a more sustainable TP system looks like.”

Companies traditionally focus their TP effort on analysing information and data, confirming it, and then creating a process that is monitored and adjusted. The Andersen model focuses on three middle steps that are often overlooked in the process.

One is the socialisation aspect, Mr Kiyan explained.

“Solving problems requires outreach and buy-in from stakeholders,” he said. “For global organisations, you will require input and information and outputs that you can’t control.

“Traditionally companies have focused on tax and transfer pricing as a technical area. You analyse, you commission a planned study in-house and then you enlist people to make any adjustments that need to happen.

“What doesn’t happen most of the time is a sustained process of socialising what the planning/analysis reveals and getting buy-in. This allows you to confirm or revise your approach, before you memorialise it.

“The practical thing to do is build a stronger, broader team that comes on the transfer pricing journey in an organisation and has buy-in to the approach. If you look to IT, they do this all the time.”

Ms Benedicte agreed.

“These skills are becoming more important because the regulatory regime is also moving to a more behaviourally based one. The authorities are looking at the commercial rationale behind your decision-making, they are asking for contemporaneous evidence rather than bench-marking and pricing. They want more holistic forms of evidence linked to governance and business processes. Documentation needs to be more robust.

“This is against a backdrop of transparency such as with base erosion profit-shifting and in conjunction with updated OECD guidelines.

“In speaking to our global colleagues, we are hearing stories about dossiers, or even the concept of a forward-dossier in places such as India where the movement of goods and movement of people has required strict reporting on an almost real-time basis.”

While a chief transfer pricing officer remains an unlikely job title for now, the trajectory of IT within companies suggests that may not remain the case forever.

The Andersen team suggests some simple steps to gently encourage transfer pricing specialists, or the CFOs of an organisation, to create a TP environment that is more sustainable and supportive of an organisation’s strategy.

  1. Formalise the TP role within group finance:
    • Make TP a standing agenda item in group finance meetings.
    • Share select updates from operations with the TP team.
  1. Draft and circulate a TP policy team chart:
    • List executive sponsors and global contacts.
    • Consider the RACI approach – responsible, accountable, consulted and informed.
    • Include non-finance stakeholders in operations.
  1. Draft and circulate key TP policy documents:
    • Formal TP policy
    • Informal TP policy model
    • TP policy memos

Sharan Samra is managing director, marketing, communications and business development at A&A Tax Legal Consulting.

A turning point for transfer pricing?
image intro
accountantsdaily logo

accountants daily logo Newsletter

Receive breaking news directly to your inbox each day.