Assessing the Transfer Pricing Automation Potential: The Role of Human Capabilities

Abstract

Tax departments continue to explore ways to streamline operational transfer pricing processes. Automation is, in theory, a rational choice for handling the increased burden of tightened transfer pricing regulations and compliance requirements. However, many multinationals continue to use various manual applications for handling pricing and documentation obligations. In this article, the authors address this paradox and argue that in-house human capabilities play a significant role in the potential transition towards automation that needs to be addressed when assessing the degree of automation readiness. Essentially, multinationals need to go beyond an evaluation of technical and system conditions when determining if automation tools can realistically be deployed in operational transfer pricing processes.