Local File

Automation
Roadmap

“ Given the importance
of local files in ensuring
compliance with local tax
regulations, it is crucial for
MNEs to have an efficient
and effective process for
managing and preparing
these documents. “
Local File Automation Roadmap
This is a comprehensive guide designed to help multinational enterprises
(MNEs) streamline and optimize the preparation of their local transfer pricing
files using advanced technology.
By following this roadmap, you will be well-prepared to make informed decisions
about the right technology solutions for your local transfer pricing documentation
needs, ultimately saving time and costs, reducing risks, and ensuring compliance
with local tax authorities.
Local files form a critical component of the transfer pricing documentation
process, providing detailed information about an MNE’s intercompany transactions
and transfer pricing policies at the local entity level. Given the importance of
local files in ensuring compliance with local tax regulations, it is crucial for MNEs
to have an efficient and effective process for managing and preparing these
documents.
This is where technology comes into play, offering a range of solutions that can
help MNEs automate and optimize their local file processes.
Local File Automation Roadmap | 2
 Local File Automation Roadmap
Basic tools

In-house vs
Point solutions Off-the-Shelf?

Comprehensive
platforms

1 2 3 4 5

Understanding Assessing your Exploring available Implementing the Monitoring and

the importance current local technology chosen technology refining the automated
of local files file process solutions solution local file process

Key for ensuring Assess your Obiective y Setting up the Continuous

compliance with data collection, analize a range system, training monitoring and
local tax rules and document technology staff, integrating refining of new
regulations generation, solutions that with existing process is crucial
and review and are available and systems, and to ensure it
approval. It’s a consider pros and conducting testing remains efficient,
crucial step before cons effective, and
implementing compliant
any technology with local tax
solutions regulations

Local File Automation Roadmap | 3

01
Understanding the Importance of Local
Files in Transfer Pricing Documentation and
Building Awareness in the Organization

Local files play a critical role in transfer

pricing documentation by providing detailed
information about an MNE’s intercompany
transactions, transfer pricing policies, and
compliance with local tax regulations at the
local entity level.

The primary purpose of local files is to

demonstrate that the MNE’s transfer pricing
policies are in line with the arm’s length
principle and that the entity has complied
with local tax rules and regulations.

Given the importance of local files, it

is crucial to build awareness within the
organization about their significance and the
need for accurate and timely preparation.

GATED: LF Automation Roadmap | 4

Key components of local transfer pricing documentation
typically include:

A description of the MNE’s local business operations, including its organizational

structure, management, and business strategies.

A detailed analysis of the intercompany transactions involving the local entity,

including the nature and volume of transactions, pricing policies, and the rationale
for the selected transfer pricing methods.

A functional analysis of the local entity, outlining its functions, assets, and risks.

Financial data, such as financial statements and tax returns, relating to the local
entity and its intercompany transactions.

Supporting documentation, such as contracts, agreements, and transfer pricing

studies, to substantiate the transfer pricing policies and compliance with local tax
regulations.

Local File Automation Roadmap | 5

Building awareness in the organization involves:

• Educating key stakeholders: Ensure that management, finance, tax, and other relevant teams
understand the importance of local files and the potential consequences of non-compliance. This
may involve conducting workshops, training sessions, or presentations to provide an overview of
transfer pricing regulations and the role of local files in demonstrating compliance.

• Establishing clear roles and responsibilities: Clearly define the roles and responsibilities of
different teams and individuals within the organization when it comes to the preparation and
management of local files. This helps ensure that everyone involved in the process is aware of their
responsibilities and can contribute effectively to the timely and accurate preparation of local files.

• Promoting a culture of compliance: Foster a culture within the organization that values and
prioritizes compliance with transfer pricing regulations. Encourage open communication and
collaboration between different teams, and recognize and reward those who contribute to
maintaining compliance.

• Implementing internal controls and monitoring: Establish internal controls and monitoring
processes to ensure that local files are prepared accurately, completely, and in a timely manner.
Regularly review and update these controls to ensure they remain effective and aligned with any
changes in local tax regulations.

By building awareness within the organization about the importance of local files and fostering a
culture of compliance, MNEs can help ensure that their transfer pricing documentation processes
remain efficient, effective, and compliant with local tax regulations.

Local File Automation Roadmap | 6

02 Assessing your Current
Local File Process
Before implementing technology solutions for local file automation,
it is crucial to assess your current process to identify areas for
improvement or streamlining. This assessment should cover the
following aspects:
• Data collection: Evaluate the efficiency and accuracy of your
current data collection process, including the sources of
data, the methods used to gather and validate data, and any
challenges or bottlenecks that may exist.
• Document generation: Assess the process of generating
local files, including the use of templates, manual input,
and consistency in formatting and content across different
jurisdictions and entities.
• Review and approval: Examine the review and approval process
for local files, including the roles and responsibilities of different
stakeholders, the time taken for review, and the effectiveness of
communication and collaboration between stakeholders.
Aibidia supports clients in the discovery phase
by leveraging our experienced transfer pricing
team to conduct in-depth discussions and analyze
their current local file processes. Through expert
consultation, process mapping, and bottleneck
identification, we help clients gain a deeper
understanding of their main challenges and tailor
our solutions accordingly. We provide customized
recommendations and best practices to address
the identified issues, ensuring that our platform
aligns with the client’s specific needs and
requirements.
Local File Automation Roadmap | 7
 03 Exploring Available Technology
Solutions for Local File Automation

There is a range of technology solutions available to help MNEs automate and optimize their local file
processes. These solutions can be broadly categorized into the following:

• Basic tools: Basic tools such as Excel, Word, and other office software can be utilized to manage and
prepare local files. Although these tools may be widely available and familiar, they may not offer the
specialized features or functionality needed for more complex tasks and may lack integration with other
systems or processes.

• Point solutions: Point solutions are standalone products or services designed to address specific problems
or needs within the local file process. Examples include document generation tools, data validation tools, or
transfer pricing calculation software. While point solutions can be effective and cost-efficient, they may not
be integrated with other systems or processes and may not be suitable for more complex situations.

• Comprehensive platforms: Advanced transfer pricing technology platforms offer a range of features and
functionality designed to support the entire transfer pricing documentation process, including local file
automation. These platforms may include tools for data capture, analysis, and visualization, as well as
document generation and collaboration. Comprehensive platforms can provide a single, integrated system
for managing all transfer pricing lifecycle (including compliance), making it easier to ensure consistency,
accuracy, and compliance across the organization.

Local File Automation Roadmap | 8

Level/Type Tools Advantages Limitations Suitable For

May not have

specialized features
Always available tool for and functionality
basic data analysis and needed for advanced Simple transfer pricing
Excel, Word, Outlook,
Basic manipulation familiar tasks, may not be processes and small
messengers
to the organization; integrated with other scale operations
limited learning curve. systems or processes,
may not be efficient for
repetitive tasks.

Focused on a specific
Highly effective at function or area of
Standalone products or
solving a particular operation, may not be
services that address Solving specific limited
Point solutions issue, easy to integrated with other
a specific problem or challenges
implement, cost- systems or processes,
need
effective may not be suitable for
complex problems.

A single, integrated
system for managing
Comprehensive
all aspects of transfer
systems that support More expensive,
pricing, efficient and Large organizations
full range of transfer require some
Platforms effective for large or needing full transfer
pricing activities, from training and support,
complex organizations, pricing management
data management to implementation.
flexible and adaptable
compliance and OTP
to changing
requirements

Local File Automation Roadmap | 9

“Aibidia stands out from other options by
offering a seamless, data-driven transfer
pricing platform with a customer-centric
onboarding experience.

Our flexible pricing model, tailored to your

needs, ensures cost-effectiveness for
businesses of all sizes. With a proven track
record of successful implementations, Aibidia
delivers an efficient and reliable solution to
revolutionize your transfer pricing processes.”
In-House vs Off-the-Shelf Tradeoff

When considering technology solutions for local file automation, MNEs may face the decision of whether to develop a custom-made
in-house solution (or with the help of a contractor) or to purchase a standard application available on the market. Both options have
their pros and cons, and the choice will depend on the specific needs, priorities, and resources of the organization.

In-House Development Off-the-Shelf Application

PROS PROS

✓ Customizable to specific needs ✓ Quick implementation and deployment

✓ Potentially lower costs in the long-term ✓ Proven and tested technology
✓ Control over source code and intellectual property ✓ Regular updates and customer support

CONS CONS

✕ High initial development costs ✕ Limited customization options

✕ Longer development time ✕ Usually higher ongoing costs for licensing and maintenance
✕ Risk of development delays or budget overruns ✕ Dependence on vendor for future updates and support
✕ Limited experience and expertise in-house ✕ Potential compatibility issues with other systems

Local File Automation Roadmap | 11

04 Implementing the Chosen
Technology Solution

Once you have selected the most suitable technology solution for your local file
automation needs, it is important to plan and execute the implementation process
effectively. This may involve the following steps:

• Setting up the system: Configure the chosen technology solution to meet your
organization’s specific needs and requirements. This may involve customizing data
formats, setting up connections, and applying workflows and processes.
With Aibidia, you can expect a
• Training staff: Ensure that staff members who will be using the technology solution smooth and efficient implementation
receive appropriate training and support to ensure they can effectively utilize the system. experience. Our expert team
configures the platform to meet
• Integration: If necessary, integrate the chosen technology solution with your your organization’s specific needs,
existing systems and processes to ensure seamless data flow and collaboration provides staff training, and seamlessly
between different functions within the organization. There is a range of options integrates with your existing systems.
available here. We conduct thorough testing and
work closely with you to refine and
• Testing and refinement: Conduct thorough testing of the implemented technology adjust as needed, ensuring optimal
solution to identify any issues or areas for improvement. Make refinements and performance and user experience.
adjustments as needed to ensure optimal performance and user experience.

Local File Automation Roadmap | 12

05 Monitoring and Refining the
Automated Local File Process

After implementing the chosen technology solution, it is crucial to continuously monitor and refine the automated local file process to
ensure it remains efficient, effective, and compliant with local tax regulations. This can involve the following activities:

Tracking key performance indicators (KPIs): Monitor KPIs
related to the local file process, such as time spent on data
collection, document creation, review and approval times,
and compliance coverage. Use these KPIs to identify areas
for improvement and track progress over time.
Soliciting feedback from users: Regularly gather feedback
from users of the technology solution (both the transfer
pricing team and other stakeholders) to identify any issues or
challenges they may be experiencing. Use this feedback to
inform refinements and adjustments to the system.

Staying current with local tax regulations: Keep abreast of
changes to local tax regulations and requirements that may
impact your local file process. Update your technology solution
and processes as needed to ensure ongoing compliance.
Conducting periodic reviews: Carry out periodic reviews
of your automated local file process to ensure it continues
to meet the needs of your organization and complies with
local tax regulations. These reviews may involve evaluating
the effectiveness of the technology solution, assessing the
accuracy and completeness of the local files generated, and
identifying any new risks or challenges that may have emerged.

Local File Automation Roadmap | 13

By following this Local File Automation Roadmap, you will
be well-equipped to make informed decisions about the
right technology solutions for your local transfer pricing
documentation needs.

Embracing technology and automation in your local file

process will not only save time and costs but also reduce
risks and ensure compliance with local tax authorities. In
the long run, this will contribute to the overall efficiency
and effectiveness of your organization’s transfer pricing
strategy and compliance efforts.

Contact Us: Follow Us:

Aibidia Ltd www.linkedin.com/company/aibidia

Kalevankatu 30, 4th floor, www.youtube.com/@aibidia7056/
00100 Helsinki www.instagram.com/aibidia
info@aibidia.com