Client: AQUI Industry: Manufacturing Solution: SONDA IT has produced a Transfer Price solution that satisfies the requirements of the Brazilian IRS
Balluff is a German multinational company that specializes in manufacturing sensors and developing industrial automation solutions, with representation in more than 50 countries. It chose SONDA IT, which is a company that provides fully integrated information technology solutions, to support tax calculations established by legislation regarding the relationships between a Brazilian branch, its parent company and other subsidiaries.
The company has been in Brazil since 1983, and it has a manufacturing plant in Vinhedo within São Paulo state and facilities in other states, such as Rio de Janeiro, Bahia and Rio Grande do Sul. Its parent company is in Germany, and the Brazilian operation must report all its tax transactions involving the purchase and sale of goods or raw materials with foreign related companies to the Brazilian IRS (Receita Federal). This process ensures that it is not sending profits within the price of its goods to its parent or to another subsidiary.
This requirement is handled using the SONDA IT Transfer Price solution, supplied by its Applications Division. Brazilian law controls transactions between companies domiciled in Brazil and foreign companies. It provides five models to calculate the comparison of prices inside and outside Brazil. The company chose the Transfer Price tool from SONDA, as it has native integration to the SAP environment, which is used by Balluff throughout the world. The system can directly search in the SAP modules for the information it requires to carry out the calculations.
This reporting obligation is annual, however; Balluff can monitor this data every month using the Transfer Price tool. The tool enables this process to be performed routinely, and avoids running out of time to make last minute adjustments before transmitting the reports. It ensures full compliance with legislation, and the standards required by Government. The tool can also produce various supporting reports, and by analyzing the data captured it can consolidate important indices for a particular time.
“The entire deployment process was carried out by our internal team together with support from SONDA IT, who closely accompanied the process and secured the required standardizations to make the system function correctly within Balluff. We are completely satisfied. We received fast and efficient technical support with specific responses that were easy to implement,” explained Roberto de Andrade, Cost Manager at the Brazilian subsidiary.
Balluff sells four to five thousand different products, in addition to raw materials that feed production, which also need to be reported to the Tax Authorities. The technical list to produce a single product can require 30 to 40 different articles. Such a diversity of items incorporated into the manufacture of sensors, mean that transfer price calculations would be impossible perform manually. “The SONDA IT tool meets a requirement that we could not complete using tables, and that would definitely result in a failed process”, said Mr. Andrade.
The investment in implementing the tool was approximately R$ 70,000 to 80,000, with a further R$ 30,000 for the license to use the solution. and R$ 20,000 for its annual maintenance. The Brazilian subsidiary needed the endorsement of the parent company to acquire the tool, which also monitored the entire operation, and sent a representative from Germany to understand the product and SONDA IT. Subsequently this initiative was approved.
“We went through a judicious process in choosing Balluff for our Transfer Price solution and closing the business laid the foundation to provide a specialist and high quality service that is suitable and fully compliant with our customer’s requirements, including customization according to the standards that the company requires,” concluded Eduardo Borba, Vice-President of the Applications Division at SONDA IT.
Balluff specializes in manufacturing sensors and developing solutions for industrial automation, and participates in the energy, plastic and packaging, automotive, mining and metallurgy, automobile accessory retailing, machines and metals markets. It provides a broad and complete range of sensors, identification systems, industrial and connectivity networks for customers from all sectors of the market. It is the only multinational in its category with industrial facilities in Brazil. It has 2,600 employees, located in over 50 countries.
Transparency in its tax transactions and the ability to demonstrate that profits are not being sent abroad within the price of its goods to its parent or to another subsidiary.
• Save time, automate and qualify the information sent to the IRS.
• Monthly financial planning of taxes from transactions with related companies (IRPJ and CSLL).
• Implement a tool that communicates with SAP (used by the company worldwide) avoiding duplicate entries.
The main benefits were gains in performance, productivity and efficiency, due to the system resources brought to Balluff.
• Gains in confidence with the automation of data extraction from SAP and transmission of information to the IRS.
• The tool provided support for monthly monitoring, and various supporting reports were issued that analyzed the data captured.
“The SONDA IT tool meets a requirement that we could not complete using Excel tables, and that would definitely result in a failed process”.
Roberto de Andrade, Cost Manager at the Balluff subsidiary.