In the past, transfer pricing was largely retrospective, focused on documentation and adjustments at year-end. But this approach is being rendered obsolete by global reforms like BEPS 2.0 and the OECD’s Pillar Two global minimum tax.

Tax authorities in APAC jurisdictions are increasingly requiring:

• More granular, transaction-level data
• Real-time alignment between pricing policy and execution
• Evidence of consistency across local files, Country-by-Country Reports, and financial outcomes

Companies in the Asia-Pacific region that delay implementation of Operational Transfer Pricing face growing exposure to:

• Pricing misalignments across markets and legal entities
• Data quality issues that compromise documentation and audit readiness
• Costly year-end adjustments, which are hard to defend and often invite audit challenges
• Non-compliance with minimum tax and substance-based regulations in markets like Singapore, Indonesia, and Australia.

In a region where tax enforcement is becoming more aggressive, the lack of OTP increases the risk of tax reassessments, penalties, and reputational damage.

Asia-Pacific’s unique business structures - ranging from regional hubs in Singapore and Hong Kong to contract manufacturers in Vietnam, Thailand, and India - add layers of complexity to intercompany pricing.

Operational Transfer Pricing provides the control mechanisms needed to manage this complexity by enabling companies to:

• Monitor intercompany margins in real time
• Detect pricing variances across jurisdictions
• Reduce manual year-end true-ups and documentation effort

For APAC businesses, implementing OTP is the key to keeping pace with operational, tax, and regulatory changes - while protecting profitability and ensuring compliance.

From Australia’s Justified Trust program to China’s anti-avoidance initiatives and India’s expanded audit scope, the APAC region is at the forefront of transfer pricing enforcement. Regulators expect accurate, real-time intercompany pricing supported by robust systems and processes.

OTP is now a foundational requirement for transfer pricing compliance in Asia-Pacific, not just a back-office tax function. It requires collaboration between tax, finance, supply chain, and IT, along with the right technology tools to track, monitor, and execute pricing policies daily.