Hi Lauren,

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Apps2fusion Team

Hello Lauren,

1) Assigning transfer pricing rules in Oracle EPM involves several steps. Here's a general guide on how to do it:

• Set up a transfer pricing methodology: Before assigning transfer pricing rules in Oracle EPM, you need to decide on the transfer pricing methodology that you want to use. There are several methodologies to choose from, including cost-plus, resale price, and transactional net margin method (TNMM). Once you have selected a methodology, you need to configure it in Oracle EPM.
• Create a transfer pricing rule: In Oracle EPM, go to the "Transfer Pricing Rules" section and create a new rule. You will need to provide information such as the rule name, the transfer pricing methodology, and the entities involved in the transaction.
• Configure the rule parameters: Once you have created the transfer pricing rule, you need to configure its parameters. This involves defining the criteria that will be used to determine the arm's length price, such as the comparables used, adjustments made, and the profit level indicators (PLIs) used.
• Test the transfer pricing rule: Before applying the transfer pricing rule, it's a good idea to test it to ensure that it produces the desired results. Oracle EPM provides tools for testing transfer pricing rules, such as the ability to run simulations and compare the results against benchmarks.
• Apply the transfer pricing rule: Once you are satisfied with the transfer pricing rule, you can apply it to the relevant transactions in Oracle EPM. This will ensure that the transactions are priced at an arm's length price and comply with transfer pricing regulations.

It's worth noting that assigning transfer pricing rules in Oracle EPM can be a complex process, especially if you are dealing with multiple entities and jurisdictions. It's important to seek expert advice and ensure that your transfer pricing policies are in compliance with local regulations.

2) Transfer pricing rules should be dynamic and not hard coded because transfer pricing involves complex economic analyses and there are many factors that can affect the arm's length price of a transaction. By using dynamic rules, you can better capture these factors and adjust your transfer pricing policies accordingly. Here are a few reasons why dynamic transfer pricing rules are better:

• Flexibility: Dynamic transfer pricing rules allow you to adjust your policies based on changing market conditions, economic trends, and other factors that can impact the price of goods or services. This flexibility can help you stay competitive and maximize profits.
• Compliance: Transfer pricing regulations are constantly evolving and becoming more complex. By using dynamic transfer pricing rules, you can ensure that your policies are in compliance with the latest regulations and guidelines.
• Accuracy: Hard-coded transfer pricing rules can be too rigid and may not accurately reflect the unique circumstances of each transaction. By using dynamic rules, you can take into account specific factors such as changes in market conditions, industry trends, and the performance of specific products or services, leading to more accurate transfer pricing calculations.
• Efficiency: Dynamic transfer pricing rules can be more efficient as they can automate the transfer pricing calculation process, allowing companies to spend less time on manual calculations and focus more on other business-critical tasks.

Overall, dynamic transfer pricing rules provide greater flexibility, compliance, accuracy, and efficiency, which can help companies optimize their profits and mitigate the risks associated with transfer pricing.

Thanks & Regards,

Apps2fusion Team

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