Transfer pricing has become a controversial issue in the global business world, especially as multinational enterprises (MNEs) face tighter regulations from tax authorities and are impacted by changes in government policies such as tariff adjustments. Ensuring compliance with arm’s length principles and local rules is critical to avoid disputes and penalties. Specialised transfer pricing databases are invaluable tools that make this process more efficient and manageable.
What Are Specialised Transfer Pricing Databases?
These databases are platforms designed to help businesses evaluate intercompany transactions by providing access to industry benchmarks, financial data, and transaction analyses. They ensure a company’s pricing strategies align with international standards and withstand regulatory scrutiny. In addition to compliance, these databases add strategic value by highlighting optimisation opportunities.
Key Features and Benefits
- Comprehensive Data Access
These platforms provide financial information on companies across industries and geographies, helping identify relevant comparables for benchmarking and TP documentation purposes. - Customisation Options
Filters for industry, location, and transaction type make it easier to tailor analyses to specific needs. - Compliance Support
Many databases include templates for documentation that meet OECD guidelines and country-specific regulations. - Efficiency and Credibility
Automated data gathering saves time, while reliable third-party data enhances documentation, making audits smoother and less risky.
The considerations to be made by a firm when selecting a database, include the scope, industry relevance, ease of use and budget.
Popular Transfer Pricing Databases
- Orbis by Bureau van Dijk, Thomson Reuters ONESOURCE, TP Catalyst , Bloomberg BNA, RoyaltyRange
Challenges of the Transfer Pricing Regime in Sub-Saharan Africa (SSA)
- Lack of Reliable Comparable Data: The scarcity of publicly accessible data and incomplete database coverage in Sub-Saharan Africa creates barriers to obtaining independent party information. Consequently, analysts must often utilize foreign comparables and international databases, potentially affecting the robustness of their findings.
- Resource and Skill Constraints: The effectiveness of transfer pricing oversight is frequently compromised by tax authorities’ resource constraints, including gaps in technical expertise and understaffing. These limitations impact their ability to properly evaluate related party transactions and handle compliance matters.
- Inadequate Treaty Networks: Few African countries have comprehensive tax treaty networks with other countries.
Conclusion
Specialised transfer pricing databases are essential for businesses navigating complex regulatory environments. They ensure compliance, reduce risks, and provide insights to enhance financial performance. Although there are costs and challenges, the benefits far outweigh them. Investing in the right database is not just about compliance but a strategic decision to position your business for long-term success.