Red Ventures Strengthens Local Tax Position with CrossBorder Solutions
Multi-national digital marketing company proactively addresses areas of tax risk, and significantly reduces TP documentation process costs
Managing Transfer Pricing Compliance in a Post-BEPS World
With entities in the U.S., Brazil, Puerto Rico, the U.K., and Australia, Red Ventures is under the watchful eye of some of the most aggressive tax authorities in the world. Given that the majority of Red Ventures’ transactions involve intellectual property and intercompany services—two of the most highly scrutinized types of transfer pricing transactions—the company’s challenge was to employ streamlined processes and produce consistent, detailed documentation.
Before joining XBS, Red Ventures outsourced its transfer pricing documentation to traditional consultants throughout the Big Four. But the process was laboriously manual and haphazard, involving various consulting firms in different jurisdictions.
Red Ventures needed to streamline transfer pricing processes, produce more detailed documentation, and organize reports so they’d have studies to refer to from year to year.
Transforming Compliance into a Streamlined Operation
Red Ventures has intercompany transactions all over the world, which means transfer pricing documentation has to meet unique local regulations in various jurisdictions. Hiring a series of local consultants, as Red Ventures had done in the past, resulted in choppy, inconsistent reports, and inefficient processes with repetitive work.
CrossBorder Solutions’ leading transfer pricing technology acted as a central station for documentation. By providing a central homebase for generating reports, we were able to construct a consistent approach to reporting for each jurisdiction where Red Ventures operated. Our software allowed Red Ventures to home in on their intercompany transactions, identify new ones, and produce robust documentation across the board.
More for Less.
Our team offered Red Ventures transparent, competitive pricing—read: no hidden fees—allowing the company’s tax department to generate more detailed reports for less than they had been paying traditional consultants. The company also saved on the cost of benchmarking searches because our experts leveraged prior years’ benchmarks—as opposed to starting from scratch—which saved on cost, resources, and time.
Knowing how daunting it can be to transition from traditional outsourcing to software—and inviting Red Ventures’ tax department to play a key role in compliance—our experts simplified the process. Data requests were straightforward, so Red Ventures was able to reduce the time they spent interviewing company executives. Deliverables were on schedule, leaving enough time to make strategic decisions. Red Ventures’ VP of Tax Ray Salort raved, “We had the same level of expertise as we did at the Big Four—if not better.”
Personal Client Relationships
Our team took the time to understand not only Red Venture’s transfer pricing but also, the business, which ensures better reporting. Back-and-forth communication, and responsive and efficient professionalism created a foundation of collaboration, which anchored the entire compliance process from planning and identifying transactions to robust documentation. The result? A proactive approach to transfer pricing.
Another upside? Education. Our professionals demonstrated how tax authorities view transfer pricing documentation and showed Red Ventures how to think about related-party arrangements. Red Ventures’ tax professionals were better able to identify intercompany transactions, value drivers, and intellectual property resulting from those transactions.
Our team paid extra attention to vulnerable transactions. By identifying service transactions that generated intellectual property in foreign jurisdictions, for example, Red Ventures was able to create legal licensing agreements and properly allocate profits. Software also took the guesswork out of benchmarking searches by producing reliable comparable data, thus reducing the risk of audits and adjustments, and maintaining a better global tax position.
Integrating Tax into the Business
Our team has helped Red Ventures tackle more than just transfer pricing documentation—they’ve been able to incorporate tax into part of the company’s business plan. “Working with XBS connected us with the business more,” says Salort. “The business folks know exactly what we’re doing, and they understand the importance of it.”
By looking at the company holistically, Red Ventures was able to identify and understand key value drivers and how to allocate profits based on that value-add. Understanding how key functions make up the value chain also enables the company to produce more detailed documentation—one of its original goals. Using our software, Red Ventures is able to apply a single, organic process to the entire group, base transfer prices on reliable comparable data, and allocate profits in advantageous jurisdictions, which saved money and added to the company’s bottom line.
As Salort says, “We have saved millions of dollars in taxes thanks to XBS.” Which, of course, is good for the tax department and the business as a whole.