Using Company Data for Transfer Pricing Compliance

Transfer Pricing Policy Underpins Compliance and Transparency

|  A Clear TP Policy Ensures Alignment with the Arm’s Length Principle

A transfer pricing (TP) policy outlines how a business sets prices for transactions between related entities within a corporate group. These can include the sale of goods, provision of services, royalties, and financing arrangements. For tax purposes, these prices must align with the arm’s length principle—reflecting terms that would have been agreed upon between independent parties. A clear TP policy not only helps ensure regulatory compliance but also improves internal consistency, financial planning, and operational governance.

|  TP Policies Are Essential Amid Growing Regional Scrutiny

In Southeast Asia, where tax authorities are intensifying their scrutiny of intercompany transactions, a well-defined TP policy has become increasingly vital. Countries such as Malaysia and Vietnam have adopted formal TP regulations, and tax authorities are increasingly requiring detailed documentation to justify pricing decisions. Without such a policy, companies expose themselves to audits, penalties, and reputational risk. Moreover, inconsistent or ad hoc pricing across borders can create uncertainty and invite tax disputes.

Beyond compliance, a TP policy provides a framework that supports internal decision-making. It offers clarity to local teams and finance departments on how to handle cross-border transactions, ensuring alignment with broader commercial goals and local tax laws. This becomes particularly important in complex operating environments where regulatory interpretations can vary between jurisdictions.

Ultimately, a strong TP policy serves as both a compliance tool and a strategic asset. It demonstrates that the company is actively managing transfer pricing risks and is committed to operating transparently within the regulatory frameworks of Southeast Asian markets.

Data-Rich Documentation is Essential for TP Defensibility

|  Key Financial Metrics Strengthen TP Benchmarking

Financial statements and industry reports are central to supporting transfer pricing documentation. Tax authorities in Southeast Asia increasingly expect intercompany transactions to be backed by credible, third-party data that shows the pricing is consistent with market behaviour. In this context, financial data such as profit margins, cost structures, and revenue profiles are used to benchmark related-party transactions against those of independent entities.

Company-level financial statements help demonstrate the overall financial position and performance of the tested party in the transfer pricing analysis. These figures provide the baseline for calculating key indicators such as operating margin, return on assets, or return on capital employed—metrics commonly used in the transactional net margin method (TNMM), one of the most applied TP methodologies in the region. Without reliable and comparable financial data, the arm’s length nature of the transaction becomes difficult to establish.

Reference: Malaysia Transfer Pricing Guidelines 2024

|  Industry Reports Provide Context for Defending TP Outcomes

Meanwhile, industry reports offer broader context to the numbers. They help validate assumptions about market structure, competitive dynamics, and operating conditions that influence profitability. For instance, a loss-making subsidiary may justify its position if the industry as a whole is experiencing contraction. Alternatively, high margins may be defendable if the company operates in a niche or capital-intensive segment. These insights provide the necessary economic rationale that bridges the gap between numbers and narrative.

In short, financial statements and industry reports form the evidentiary backbone of TP documentation. They enable businesses to articulate not just how their prices were set, but why—an increasingly important distinction in audits across Southeast Asia.

Clear Benchmarks Depend on Specific Financial Data Points

|  Granular Financial Metrics Are Key to Accurate Benchmarking

Defensible transfer pricing policies rely on access to precise and relevant data points that can withstand scrutiny from tax authorities. In Southeast Asia, where documentation requirements are becoming stricter, companies must be able to show that intercompany prices are in line with those applied in comparable third-party transactions. This requires more than just high-level figures—it demands granular, standardised financial and operational data.

Key data points often include net sales, cost of goods sold, operating expenses, and segment-specific profitability metrics. These are used to calculate ratios such as gross margin, operating margin, and return on total costs, which serve as the basis for benchmarking under methods like the TNMM or comparable uncontrolled price (CUP) method. Additional details, such as working capital levels or asset intensity, may also be relevant depending on the function-risk-asset profile of the tested party.

|  Contextual and Qualitative Data Strengthen Comparability

Beyond company-level data, defensible benchmarking also requires understanding the economic circumstances surrounding each transaction. This includes geographic factors, market conditions, and industry-specific risks. For example, comparing a logistics provider in Thailand with one in Singapore may require adjustments to account for wage differentials, infrastructure costs, or market size. Thus, qualitative data—such as industry classifications, business descriptions, and customer profiles—becomes essential for ensuring comparability.

The strength of a transfer pricing analysis rests on the quality and relevance of its data inputs. Companies operating in Southeast Asia must ensure they have access to structured, accurate, and consistent data if they are to defend their transfer pricing policies effectively in audits or disputes.

Free or Fragmented Data May Undermine TP Defensibility

|  Public Data Sources Often Lack Depth and Coverage

While publicly available or free data sources can appear cost-effective, relying on them for transfer pricing analysis often introduces significant risk—particularly in Southeast Asia, where company disclosures and reporting standards vary widely. Inconsistent, outdated, or incomplete data can weaken the credibility of a transfer pricing policy and expose businesses to tax authority challenges.

A common issue with free sources is limited coverage. Many public databases in Southeast Asia only capture larger firms or listed entities, omitting a significant portion of privately held businesses that may be more relevant comparables. Even when data is available, the level of detail is often insufficient. Financial metrics may be aggregated across segments or missing altogether, making it difficult to isolate data for benchmarking. Moreover, company classification systems can be inconsistent, leading to misalignment in peer selection.

|  Unverified Data Increases Risk During TP Audits

Another limitation lies in data timeliness. Free platforms may not be updated regularly or lack historical data needed to support multi-year analyses—a requirement in many jurisdictions. In fragmented environments, gathering usable data from disparate sources can also be time-consuming, error-prone, and costly in terms of human resources. Manual collection increases the likelihood of oversight, particularly when adjusting for functional differences or economic conditions.

The risks compound during an audit. Tax authorities may challenge benchmarks that rely on unverifiable or non-transparent data. If a company cannot substantiate how and why specific comparables were selected, it weakens the defensibility of the entire pricing strategy. In some cases, this can result in transfer pricing adjustments, penalties, or reputational damage.

Integrated Databases Improve Accuracy and Efficiency in TP

|  Consolidated Platforms Enable Reliable TP Benchmarking

A comprehensive database significantly enhances the quality, speed, and defensibility of transfer pricing documentation. In ASEAN, where access to standardised, reliable private company data remains uneven, a centralised platform that consolidates financials, industry classifications, and benchmarking tools can be a game-changer for businesses navigating complex tax environments.

Such platforms typically offer access to both public and private company data, with clearly structured financials, peer grouping capabilities, and industry classifications aligned with global and local standards. This enables users to efficiently filter for comparable companies based on geography, size, function, and financial metrics—all of which are essential for meaningful benchmarking. Advanced platforms may also integrate historical data and deal information, which is particularly useful for justifying intercompany pricing across multiple years.

|  Integrated Insights Reduce Errors and Enhance Audit Readiness

An added benefit is the integration of industry reports that provide critical market context. These reports help bridge quantitative data with economic narratives, enabling companies to articulate not just the “what” but the “why” behind their transfer pricing positions. For example, sector-wide margin pressures, evolving competition, or regional policy changes can all be cited to support variations in profit levels or strategic losses.

Beyond data access, comprehensive platforms reduce time and human error. By eliminating manual searches and formatting tasks, they allow tax teams to focus on analysis and strategic planning. Some also offer audit trails and documentation templates aligned with local TP rules, improving readiness during tax audits or compliance reviews.

Let Speeda Streamline Your Transfer Pricing Workflow

Accurate, structured data is the foundation of effective transfer pricing — and the right tools can make all the difference. Speeda is purpose-built to support businesses in Southeast Asia with their transfer pricing needs. With access to a comprehensive database of public and private companies across ASEAN, Speeda allows users to:

• Identify relevant comparables based on industry, region, and financial performance
• Access normalised financials and peer benchmarking
• Explore industry classifications and segment insights for stronger comparability analysis

Explore Speeda now—streamline your TP documentation, cut research time, and eliminate audit preparation uncertainty.  For a free trial, please click here. For more information regarding Speeda, please visit our website.