The OECD has provided guidance on the transfer pricing documentation structure comprising of the following 3 documents:
- Master file – Providing a general overview if the MNE and its business activities ( in general applicable to all entities within the MNE);
- Local file – Details the transactions and business activities in a more elaborate way, and
- Country-by-Country report – showing an overview for relevant jurisdictions of revenues (related and unrelated), Profit/loss before income tax, Income Tax paid, Income Tax Accrued, Stated Capital, Accumulated Earnings, Number of Employees and Tangible Assets (other the Cash and Cas Equivalent) and business activities.
Based on the recommendation MNE’s could be confronted by tax authorities with increased request for information. It is still not clear how and if tax authorities will share the information in particular derived from the country-by-country report since the information included in this report does not provide any evidence whether or not transfer pricing are at arm’s length since it does not substitute a detailed transfer pricing analysis of the individual transactions and prices based on a full functional and comparability analysis.
The guidance provided also details the issue of compliance including contemporaneous documentation, time frame, language and frequency of updates.
Please find the document under the following link:
http://www.oecd-ilibrary.org/taxation/guidance-on-transfer-pricing-documentation-and-country-by-country-reporting_9789264219236-en
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