Executive Summary

The "arm's length” standard ¹ is the internationally accepted benchmark for pricing transactions between related but legally separate entities ² of a multinational group ³ located in different tax jurisdictions. Since the adoption of the standard by the international community, multinationals have increasingly relied on expertise to navigate compliance requirements. Beginning in the 1980s, rules and regulations expanded significantly, and enforcement has tightened over time. For most multinationals, the primary concern is maintaining compliance to avoid price adjustments by tax authorities, which could lead to double taxation and penalties.

To assist multinationals in their compliance efforts, specialized transfer pricing software, beyond standard word processing and spreadsheet software, has only started to evolve in the past decade. Its promise lies in increasing the productivity of transfer pricing knowledge workers. While some productivity gains over standard office software can be demonstrated, significant gaps remain. In addition, productivity gains are not helpful if the overall quality of compliance work is not improved. For instance, months of diligently preparing data and calculations to fit every square in a domain-specific software can be rendered futile if tax authorities refute the transfer pricing policy underlying the numbers.

Unfortunately, this scenario occurs frequently because the quickest way to develop software is to offer standardized solutions. However, standardized analyses pay rarely adhere to the arm’s length principle, which inherently depends on the unique circumstances of each group. Software that restricts user flexibility abstracts too far from the robust, case-specific analyses that could otherwise be achieved with a suite of office tools. Learn more about the intersection between transfer pricing and software in the Background section.

Tax teams within multinationals understand this and, as a result, prioritize two key needs: (a) expertise in setting and applying the right policy, and (b) software that accommodates their group-specific use case while serving as a tool to document, examine, and monitor analyses guided by that policy. However, the current state of the industry does not fully address the demand for a seamless blend of expertise and technology. This is because existing solutions are often rigid, expensive, and lack compelling functionalities or incentives for collaboration with professional services firms.

Professional services firms have a significant opportunity to meet the growing demand from multinationals for expertise and customizable software. Market offerings that seamlessly combine valuable advice with tailored software solutions are, to say the least, promising. Knowledge workers ⁴ should prioritize three core attributes in software, further explored in The Opportunity section:

Access to powerful technology that is affordable, intuitive, well-documented, and trustworthy. t0 solves this with attractive product pricing, thoughtful user-centric design, robust support features, and strong privacy and security standards.

Agency over the software to deliver precisely the intended work output. To achieve this, the software must be designed to solve domain-specific tasks while remaining flexible enough to accommodate customizations for case-specific nuances. It should also enable users to create entirely new solutions that address evolving regulatory changes. t0 delivers on this by providing customizable software built from the ground up, allowing non-technical users to edit workflows, logic, data and content structures, and styles at any stage of the process. In addition, t0 extends agency by enabling users to edit the solution down to the code level, made accessible through natural language.

Ownership over work outputs produced with the software ensures that knowledge workers are incentivized to contribute to the domain, rewarded for quality-driven work, and able to pursue their personal economic goals in a meritocratic setting. t0 addresses this by granting knowledge workers control and rights over their outputs, including usage, distribution, end-client pricing, knowledge protection, and migration options.

Similar opportunities have emerged in other domains and have been successfully addressed with customizable software—though not without challenges. In The Challenge section, we delve deeper to uncover the factors that create frictions in successful software adoption. Viewing these challenges through the lens of market- and product-driven frictions helps knowledge workers better understand their situation and clarify what they truly need in software.

t0 democratizing the building of software for transfer pricing. Any compliance, planning, or operational application can be configured and tailored to specific needs. Applications can also be enhanced with agentic capabilities, enabling the performance of tasks on data or text as instructed by the user. Users can adjust the degree of freedom allowed in completing tasks, ranging from no freedom—such as programmatically setting a formula in a spreadsheet—to greater freedom, where probabilistic and varied answers are desired, such as asking an AI model to interpret new tax legislation.

t0 provides users with ultimate control over which parts of an application are fixed, such as the structure of a tax return form, and which parts are open to exploration, such as visualizing possible risk factors on a dashboard with the help of an AI model. Dive deeper into specific features of t0, our approach to established technology stacks, and the integration of generative AI tools in The Solution section.

The payoff for consultancies and in-house teams alike includes increased productivity, improved quality of deliverables, enhanced compliance coverage, and time for value-adding consulting work tailored to situational needs. t0 has the potential to level the playing field among market participants, fostering healthy competition, and enabling organizations to stay aligned with the evolving compliance landscape. Learn more about the benefits for different stakeholders in The Payoff section.

Our work on t0 is actively ongoing, with the launch of a private beta for a select group of testers imminent. The beta version of t0 is expected to be released in the second half of 2025.

Supernomial is actively engaging with professional services firms, in-house teams, vendors, academia, and tax authorities. We invite you to partner, collaborate, or simply stay in touch with us. Your support will help us shape a fulfilling and rewarding future for transfer pricing knowledge work—one that benefits everyone. Visit us at supernomial.co or contact us at hello@supernomial.co.

This whitepaper is a living document, updated periodically to reflect product advancements. The latest version is available at whitepaper.supernomial.co.

Footnotes

1. The terms arm's length standardand arm's length principle are used interchangeably throughout this document. ↩

2. Legally separate entities which are related are also frequently referred to as commonly controlled entities or taxpayers, or subsidiaries. ↩

3. The terms multinational group, multinational, and group are used interchangeably throughout this document. Multinational groups are also commonly referred to as multinational enterprises (MNEs), MNE group, or associated enterprises. ↩

4. The terms knowledge worker, expert, and professional are used interchangeably throughout this document. ↩