What are the Requirements for Transfer Pricing Documentation?
Most countries follow guidelines provided by the OECD (Organization for Economic Cooperation and Development), which recommends a three-tiered approach to documentation: 1. Master File: This provides a high-level overview of the MNE's global business operations, including its organizational structure, business activities, and financial positions. 2. Local File: This contains detailed information on each local entity's related-party transactions, including the amounts involved, the nature of the transactions, and the applied transfer pricing method. 3. Country-by-Country Report (CbCR): This is a global template that provides tax authorities with information on the global allocation of income, taxes paid, and certain indicators of economic activity among the tax jurisdictions in which the MNE operates.