Digital Transfer Pricing: A Big Bang Technology Disruption that Turns Your Data into Ta-Da!

The traditional approach to transfer pricing is not entirely data driven. “Without data, you’re just another person with an opinion,” said the American engineer W. Edwards Deming, and this quote also applies to transfer pricing. However, this notion is getting upended by digital transfer pricing, which has data at its nucleus and a slew of technology tools to undertake data-driven analysis. In this article, the authors discuss the traditional approach to documentation and its challenges. Then they familiarize the readers with a transformational way of doing transfer pricing, i.e. digital transfer pricing, and how it works, what its benefits are and how it compares with the traditional approach. The above analysis lays the groundwork for explaining why digital transfer pricing could be a big bang technology disruption.