At TP Minds America 2016, we were thrilled to speak to Niraja Srinivasan from Dell. In her role as Head of Global Transfer Pricing, Niraja has an exciting view of the current transfer pricing industry. In this interview, she discusses skills professionals will need for the future, how BEPS fit in to the industry, and what will start shaking up the industry next.
What skills do transfer pricing professionals need the most over the next three to five years?
There are two types of skills: technical and enablement skills that will be important to professional growth. On the technical side, they will need to apply judgement around trade-offs to make between the technical aspects of comparable selections verses the practical aspects of how those reviewed under an audit. They will also need valuation skills and I think all transfer pricing will become valuation at some point. It’s a great technical skill to have.
On the non-technical side they are going to need a lot of negotiating skills with auditors, tax authorities and defend their positions. It takes persuasion, clarity, charisma and the foresight on how the interaction will unfold to create a future that you want. Those kinds of negotiating skills are critical.
How can industry and government bodies really work together to build a new world order that is transparent and equitable?
That's a big ask, but ultimately it rests on BEPS working. The distrust and suspicion won’t work at all. The most successful companies are the ones that go in and build partnerships. They are transparent about relevant facts. They make very proactive attempts to explain their business model to a tax authority, and do it with excitement and sincerity. If you don't do that, you're never going to get to the actual topic that you're supposed to negotiate through. You’ve got to create a rapport and relationship. Conveying what ‘a day in the life of’ is like goes a long way.
Do you think BEPS' transfer pricing requirements go far enough?
Do they go too far?! I think its fine. BEPS is focused on linking value creation to profits to activity – that’s a fundamental risk/reward market outcome. Where I think BEPS has overstepped the line is that they've tagged too much of the profit attribution to where people are located. In most US MNCs, the key decision makers are globally dispersed. Strategic decision makers move between China, the Netherlands, the UK and the USA because they're needed in different jurisdictions to lead different teams, and to do great things. To try to chase them up, and the legal entities that employ them, and then give that legal entity some amount of residual profit is untenable and impractical.
I believe it will come off the ledge a little, especially if Treasury weighs in, and allow a reasonable contractual shifting of risks or functions. 482 and BEPS will have to merge into a unified set of transfer pricing principles
Apart from BEPS, what developments, changes, or cases within transfer pricing are the most exciting to you at the moment?
A lot of things! The most exciting thing is building an in-house team – this is quite different from a team in a professional services organisation. The in-house team is on the ground, dealing with corporate accounting, treasury, IT, legal, marketing on a tactical and collaborative level. They deal with all aspects of the business requiring enablement and enrolling skillsets and personality fit with the culture of the company. I also want them to grow into thought leaders in the industry and innovate and teach. That's very exciting for me.
The other fascinating development is what the BEPS initiative has spawned in some really small countries. Emerging tax administrations are coming up with creative and interesting rules, and frankly, it’s exciting to see how that will grow and develop.
She received her Ph.D. in Applied Economics in 1996 from the Wharton School. She holds certificates in business valuations and corporate finance. Niraja lives in Austin, TX.