Transfer pricing master file
Transfer pricing master file
The OECD guidelines include a three-tiered approach to transfer pricing documentation. This three-step approach includes the documentation of a master file, local files and country-by-country report. These are all annual requirements. As of January 2022, the OECD amended its transfer pricing guidelines for multinationals, however, no substantial amendments were made in regard to transfer pricing documentation.
The transfer pricing master file is an important part of transfer pricing compliance. The TP master file focuses on describing the context in which intercompany transactions take place. The transfer pricing master file is prepared at group level, whereas local files are prepared at company or country level. The master file must be consistent with the local files. Reading a local file is always done in combination with the master file. The master file provides a high-level overview of the multinationals group’s global business structure and activities. It also explains the group’s transfer pricing policy. Some examples of content that the master file usually contains:
- A description of the company’s activities
- Functional analysis
- Finance activities within the multinationals group
- Organisational structure
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Get in touchWhat to keep in mind: the legal requirements
The transfer pricing master file is part of the legal transfer pricing documentation requirements in most countries. To comply with all requirements and guidelines it is therefore necessary to have a master file. The TP master file must be aligned with all the local files. In certain countries, the master file has to be filed in the local language. Consequences of non-compliance with transfer pricing documentation requirements may be:
- Questions from shareholders and stakeholders
- Audits and enquiries from tax authorities
- Change of the burden of proof to you instead of the tax authority
- Penalties
Services that Quantera Global has to offer
The transfer pricing documentation requirements have a significant impact on multinationals. To assist your company with its transfer pricing requirements, Quantera Global can support you in a cost-effective manner. Quantera Global can take care of all your transfer pricing documentation, as well as reviewing your current policy and documentation. This may include the transfer pricing master file, local files and/or country-by-country report. We can review whether your current documentation meets all guidelines and requirements, both national and international.
What is in it for your company?
It is important to meet all the required guidelines and regulations, to avoid penalties and other negative consequences. Our consultants can help you with the necessary documentation, such as the TP master file. Quantera Global offers the full package, or we can simply perform reviews. This depends on your needs and wishes, see our menu-based approach.
If you would like to discuss how we can be of service to you, please make an appointment for a free consultation by phone or fill in our contact form. We are looking forward to meeting you.