For intercompany accounting — the management of financial transactions between separate legal entities that belong to the same corporate group — misaligned processes and muddled information negatively impact a multinational’s tax operations and increase their tax bills.
Tax authorities’ most effective way to generate tax revenue from intercompany transactions is by scrutinizing transfer pricing and extracting additional indirect taxes. For this reason, intercompany accounting has come under scrutiny by governments globally. Even though most work hard to toe the line, multinationals worry that they cannot defend their intercompany decision-making without meaningful improvements in their intercompany processes and reporting.
