Due to the latest Transfer Pricing Decree published by the OECD, a major shift occurred in the pricing methodology of intercompany financial transactions such as intercompany loans, financial guarantees, cash pools and in-house bank transactions. Considering that the scrutiny from different international Tax Authorities on financial transactions is greatly increasing, Treasury and tax professionals are strongly encouraged to revisit their current pricing methodology to ensure transfer pricing compliance.
But how can one comply with the latest transfer pricing regulation whilst also automating and standardizing the process? Many companies are struggling how to automate the end-to-end process of initiating I/C loans, determining the interest at arms length, recording the I/C loans in the TMS and storing the transfer pricing documentation.
With over 50 I/C loans per year, it was a huge amount of work for Royal Philips to determine the interest conditions on I/C loans in a way that it is compliant with the OECD Transfer Pricing Guidelines. Paul Rekmans, Head of Treasury, will explain how Royal Philips was looking for a fully integrated solution in order to determine and record interest conditions of an I/C loan into SAP (TMS) in a fully automated way. Therefore, Royal Philips and Zanders decided to leverage Zanders’ financial transactions transfer pricing cloud-based solution and enable SAP users to determine the arm’s length interest rate with just a few clicks. Moreover, the full documentation detailing out the arms length pricing setting is generated automatically. Royal Philips has generated already over 5000 pages of high quality I/C loan pricing documentation.
Speakers: Joris van Mierlo, Corporate Finance Manager – Royal Philips & Inigo Arechabaleta, TPS Expert – Zanders