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Case Study Preparing for a world of change: Microsoft’s forward-looking approach to transfer pricing (TP) execution and monitoring

Industry: Technology, media and telecommunications

Services: FinanceRisk and regulatoryTransfer pricing

Solutions: Finance transformationSAP

Challenge

Was achieving a global view of intercompany execution in sight?

It was time for a change. Not because things were at a stand-still, but precisely because they were already in motion. Navigating an increasingly complex and highly scrutinized regulatory environment, while undergoing a business model transformation, created significant challenges for Microsoft’s intercompany execution.

The particular challenge the client faced—a common one—was that while corporate tax liability is driven by statutory legal entity results, the design of Microsoft’s systems and surrounding processes was geared towards a consolidated and managerial view. In July 2014 Microsoft’s earnings release included the following statement: “Tax provision adjustment of $458 million, or a $(0.05) per share impact, in the fourth quarter of fiscal 2014 related to adjustments to prior years’ liabilities for intercompany transfer pricing that increased taxable income in more highly taxed jurisdictions (“Adjustment to Prior Years’ Taxes”)”.

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PwC's Risk and Regulatory team

Dietmar Serbee

Leader, US Risk & Regulatory, PwC US

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Jason Pett

Risk & Regulatory Platform Leader and Risk Partner, PwC US

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Neil Bristol

Mid-Central Region Tax Leader, PwC US

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Ken Kuykendall

Ken Kuykendall

Tax Managing Partner, PwC US

David Sapin

David Sapin

PwC Risk & Regulatory Leader, PwC US

Jason Pett

Jason Pett

Risk & Regulatory Platform Leader and Risk Partner, PwC US

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