Operational transfer pricing

The processes, systems and controls that turn a transfer pricing policy into invoiced, booked and reconciled intercompany results.

The legal contracts between group entities that set out the terms of intercompany transactions and underpin the transfer pricing policy.

The process of issuing and recording invoices between group entities for goods, services or licences delivered under a controlled transaction.

The ledger processes for recording, eliminating and reporting transactions between entities in the same corporate group.

The practice of offsetting multiple intercompany payables and receivables between group entities into a single net settlement.

The process of confirming that intercompany balances, invoices and pricing recorded by both counterparties to a transaction agree with each other.

The value-added tax treatment applicable to invoiced intercompany transactions such as management fees, service charges and licence fees.

Charges levied by a parent or head-office entity on subsidiaries for centrally-provided management, administrative or strategic services.

A defined category of supportive intra-group services eligible for a simplified 5% cost-plus mark-up under OECD Chapter VII, without full benchmarking.

The metrics used to distribute pooled shared costs among group entities in proportion to their expected use or benefit.

The end-to-end methodology for building a shared-service cost pool, applying allocation keys, and charging the resulting amounts to recipient group entities.

The transfer pricing methodology applied specifically to centralized shared service centres delivering finance, HR, IT or procurement support across a group.

A benchmarking approach that prices intra-group services by comparing internal or external hourly billing rates by role or seniority level.

The configuration, automation and controls used to embed transfer pricing rules directly into an enterprise resource planning system.