For multinational corporations, transfer pricing and its interaction with tax authorities continue to garner higher amounts of government attention. International tax codes, OECD guidelines, and rules are ever-evolving in small and large ways. Governments require corporations to share and exchange rapidly increasing amounts of information. The days of calculating and maintaining transfer price adjustments in spreadsheets have ended.

Transfer pricing software logically breaks down into two parts: data and application. This post will look at the application side. This post covers the features to look for in model automation, rules engine, allocations, results, dashboards, and reports. 

Similar to what we saw in the previous article covering the data side, a trend to look for is customization to fit each situation instead of a one-size-fits-all system that only covers a handful of transfer pricing models. Expect no-code/low-code click to configure steps that speed up and simplify the model building process. However, the option to utilize code-driven steps is also essential.

Previous Article

Our earlier article discussed how important quality data is as a starting point for a transfer pricing system. Project teams are often surprised by the low quality of the incoming raw data. Project delays will be the norm until a high-quality starting data store is established.

We’ve covered that a modern system will have the data ingestion, alignment, and enrichment steps built-in and configurable with clicks instead of code. These low-code built-ins speed up the process required to get the data to a place where it is unified, cohesive, repeatable, and a sufficient starting point for the build-out of the transfer pricing model.

Model Automation

Look for a modern transfer pricing system to run with a low amount of human intervention. We would want to see something like a workflow of workflows. Running the top-level workflow should allow control and monitoring of all the monthly processes needed to populate results, dashboards, and reports.

The system should allow workflows to run on a schedule, triggered by an outside event, or run when an internal condition is set. PlaidCloud provides a way to automate nearly every part of the transfer pricing process. Including the following automation features:

  • Create schedules to trigger workflows based on time, day, and month
  • Automatically start workflow events based on sensors
  • Control execution of workflows and steps within a workflow using conditions

Rules Engine

In a modern transfer pricing system, the rules engine should have a centralized location for creating, editing, and viewing rules. Additionally, the rules should be written in a modern non-proprietary syntax such as Python. The rules should enable access and inclusion of all the available data fields. Field examples include legal entity, entity type, GL account, trading partner, and sale type.  Having a flexible rules engine is an absolute requirement since many tax and compliance rules are written as interconnected legal requirements rather than straightforward conditions.  Therefore, they often require application of nested rules to generate the desired outcome.  The volume of these rules required globally is significant so a scalable and maintainable solution must make them easy to describe with minimal effort.

PlaidCloud’s rules are viewed in a hierarchy with point and click creation and editing capabilities. In addition, large rule sets are fully searchable and easily filtered. An example of PlaidCloud’s rule capability is assigning legal entity functions for tax purposes. The rule could specify the Reseller function if the entity is “123” AND GL account is “4567” but NOT when the sale type is “3RD PARTY”. The rule would simply be: LE == “123” and ACCOUNT == “4567” and SALE_TYPE != “3RD PARTY”.

Rule Engine Configuration Example

Transfer Pricing - Rules Engine


Like a set of centralized rules, a modern transfer pricing system should have a logical and straightforward way to create, edit, and view allocations. Expect to specify allocation drivers based on legal entity, time period, GL account, and pre-tax group. The system should provide many assignment steps across a given set of dimensions. Even a large number of allocations should process in minutes instead of hours/days.

PlaidCloud allows an unlimited number of assignment steps across an unlimited set of dimensions. Allocation assignments are easily understood and managed as a hierarchy that is viewable on a single screen. PlaidCloud also has a best-in-class allocation engine that outperforms all other technologies in the market.

Allocation Configuration Example

Transfer Pricing - Allocation Configuration


A transfer pricing system has a multitude of stakeholders, each requiring a slightly different set of results. A tax team member may need to view detailed unsummarized results on a monthly basis. In contrast, a financial controller requires summarized results in Excel. The executive team may prefer a dashboard of reported results. A modern system will provide a quick means of exploring large result sets. Expect queries that are easy to build and reuse. Excel integration is an essential tool for the analysts on the team. Look for dashboards and visuals that are easy to build and update.

PlaidCloud delivers an integrated data exploration capability. Users can instantly explore large result sets with point and click queries and summary statistics. Results are easy to export and queries can be saved and reused as an extraction step in any workflow. With PlaidXL, results and data sets in PlaidCloud are natively available to query and use in Excel. PlaidCloud’s integration with Apache Superset provides industry-leading dashboards and visualizations.

Dashboard Example

Transfer Pricing - Results Dashboard


We’ve covered some of the main features to look for when evaluating a Transfer Pricing System. Expect multiple options for automating the Transfer Pricing process. Look for time and date based scheduling, outside events that trigger workflows, and the ability to start workflows when internal variables are set.

Rules should be centrally accessible for easy viewing, creation, and editing. Additionally, the rule syntax should be easy to understand and use. Allocations also should be centrally accessible and easy to create and modify. Allocation processing time traditionally was a chokepoint in the process. Look for optimized allocations that calculate in minutes vs. hours/days. 

Expect many options to access, view, and distribute results. Expect a way to instantly explore even large data sets without the need to download the data first. Look for strong integration between Excel and Dashboards and the transfer pricing system.

We’ve also discussed customization options that enable the model to match a company’s transfer pricing procedures and process. A large percentage of the customization should be configurable with no-code/low-code steps. However, the option to utilize code-driven steps is also essential.

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All of these components are included in the PlaidCloud Goods Transfer Pricing and the Intercompany Invoicing and Tax Compliance solutions.  Please contact us to discuss your needs.