A smarter approach to compliance
For growing multinational businesses, managing transfer pricing has become a significant challenge. The pressure to prepare distinct local transfer pricing documentation in every country of operation creates a heavy administrative burden and can be quite expensive. More importantly, using different advisors in each location often leads to inconsistent documentation, presenting conflicting stories to various tax authorities. This inconsistency is a major red flag, increasing the risk of audits, adjustments, and costly penalties.
The global standard that creates opportunity
Fortunately, the OECD has provided a standardized framework to address this chaos. Under the Base Erosion and Profit Shifting (BEPS) Action 13, most countries have adopted a three-tiered approach to documentation. This three-tiered approach consists of the following elements:
- The Master File: This document serves as the global blueprint, providing a high-level overview of your entire group’s business operations, value chain, and overall transfer pricing policies.
- The Local File: This document provides the detailed analysis specific to a local entity. It demonstrates that the entity’s related-party transactions were conducted at arm’s length, referencing the policies outlined in the Master File.
- (Public) Country-by-Country Reporting: Country-by-Country (CbC) reporting is a transparency measure requiring multinational groups to disclose key financial and tax information by jurisdiction. It applies only to groups with consolidated revenues exceeding €750 million. However, even smaller entities within such groups remain subject to compliance obligations: most notably the CbCR notification, and in some cases, the obligation to publish the CbCR report on their relevant website (Public CbCR).
Our synergy-driven approach: consistency and cost-effectiveness
We leverage the OECD framework to build a cohesive and efficient global documentation package. Our process prioritizes creating a robust Master File and a comprehensive Local File template that captures the core of your business operations, your transfer pricing model and all applicable inter-company transactions. This central template can then be efficiently adapted for each jurisdiction you operate in.
This delivers two primary benefits:
- Cost-Effectiveness: Instead of starting from scratch in every country, approximately 80% of the work is already done. This dramatically reduces the man-hours and costs associated with your global compliance.
- Consistency in Storytelling: When the same expert team prepares both your high-level transfer pricing design and your core documentation, you ensure a single, consistent narrative is presented to tax authorities worldwide. This clarity and consistency significantly reduce scrutiny and audit risk.
The final step: local confirmation for legal certainty
As our global template fully complies with OECD standards, it establishes a reliable foundation for local compliance. To achieve legal certainty, we offer having the finalized documentation reviewed by an advisor in that specific country. This final check confirms compliance with any minor local nuances or specific disclosure requirements. We understand the importance of this step, and we can connect you with trusted local advisors from our network to provide this service seamlessly.
Take control of your Transfer Pricing
By adopting a centralized, efficient approach, you can reduce costs, ensure global consistency, and mitigate risk.
If you want to get more information and take control of your transfer pricing compliance, contact us today.
