Transfer Pricing Documentation

Transfer Pricing Documentation provides records that multinational enterprises must maintain to prove the compliance of their transactions with transfer pricing rules.

Enterprises must include details of all intercompany transactions, such as services provided, goods sold, loans granted, licenses issued, and asset transfers. Documentation should specify the methods used for pricing these transactions and the rationale for their selection.

The Master File and Local File formats should be used. The Master File includes global business details, financial information, and a company’s overall transfer pricing policy. The Local File focuses on specific transactions within individual countries, detailing comparability analyses and financial data.

Detailed reports must be maintained for advance pricing agreements (APAs) and any reliance on unilateral or bilateral agreements. The documentation should be updated annually and must be readily available for tax authorities’ inspections.

Comprehensive records should include contracts, invoices, transfer pricing studies, and relevant communications. Financial records must support the economic substance of transactions and the arm’s length principle.