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AI is transforming transfer pricing

Featuring Mimi Song, COO, Exactera
As Exacteraโ€™s chief operating officer, Mimi Song, is responsible for driving ongoing product innovation and developing business strategy, including identifying new opportunities for mergers and acquisitions. A leading voice in transfer pricing, Song has written for Bloomberg Tax and Treasury & Risk, among others, and she has been quoted as an economic expert online for Forbes, The Wall Street Journal, and CNN.

Q How is artificial intelligence (AI)-driven tax technology different than other technologies weโ€™ve seen?

A Traditional technologies follow fixed, rule-based instructions and deliver the same result for the same input again and again (think: if X then Y). AI, however, can learn from data as opposed to simply following formulas and rules. The more data you supply, the more it can understand. AI can tackle complex tasks. For example, in the transfer pricing world, AI can flag inconsistent information, quickly scan databases to identify suitable comparables, make compliance recommendations, and predict where youโ€™re most vulnerable to audits and adjustments.

Q How can AI-based tools assist with transfer pricing compliance?

A AI can improve transfer pricing compliance in many ways. Exactera has two new AI-driven solutions, each
addressing a distinct transfer pricing challenge. ExactMatch enhances benchmarking analyses by running efficient comparable company searches based on functional profiles, as opposed to relying solely on industry identification codes. It ranks companies in order of comparability, making armโ€™s-length pricing more reliable.

ExactReport, our new AI-driven Microsoft Word app, reviews documentation to ensure it meets country-specific requirements. If sections of documentation are insufficient, the app offers real-time modifications (think Grammarly for transfer pricing) to align with the countryโ€™s unique regulations.

Q How does AI improve the quality of transfer pricing documentation?

A AI elevates transfer pricing compliance by instantly scanning multisource data and ensuring armโ€™s-length pricing stems from a broad pool of up-to-date, reliable data. Since OECD guidelines arenโ€™t law and local rules change frequently, AI can monitor shifting regulations and flag misalignments, and tools like ExactReport can even make real-time suggestions to improve your reports. AI agents can be set up to instantly pull data from multiple departments (legal, accounting, supply chains, R&D), read contracts and invoices, and extract the appropriate information, reducing the chances of inconsistencies and manual errors.

Q How will this impact the role of transfer pricing experts and tax professionals?

A AI can make the tax function more strategic, as it can handle mundane and repetitive tasks, support complex analyses with human augmentation, and be accessible to nonprogrammers. Therefore, tax professionals will be able to think more analytically and support the business needs as the global tax landscape continues to evolve in a digital economy.

See how AI can enhance your firmโ€™s transfer pricing services, so you can serve more customers and grow your business. Become part of our ExactReport Early Adopter Program. Visit us at exactera.com/exactreport-early-adopter-program/ to learn more.

Exactera delivers AI-powered solutions for transfer pricing, tax provision, and R&D tax credits. With trusted data and intelligent automation, Exactera helps tax professionals reduce risk, improve efficiency, and achieve global compliance with confidence. Learn more at exactera.com.
Exactera delivers AI-powered solutions for transfer pricing, tax provision, and R&D tax credits. With trusted data and intelligent automation, Exactera helps tax professionals reduce risk, improve efficiency, and achieve global compliance with confidence. Learn more at exactera.com.