The OECD’s transfer pricing guidelines have become the gold standard for global compliance. Companies operating across multiple jurisdictions must prepare three main documents: the Local File, Master File, and Country-by-Country Reporting (CbCR).

Key Points:

1. Understanding the Three-Tier Framework:

   • Local File: Detailed documentation for each entity, focusing on local operations and intercompany transactions.
   • Master File: A global overview of the MNE’s business, including value chains, financials, and intangibles.
   • CbCR: High-level reporting of revenues, taxes paid, and business activities across jurisdictions.

2. Common Challenges:

   • Managing inconsistencies across jurisdictions.
   • Aligning documentation with functional and comparability analyses.
   • Handling increasing demands from tax authorities for detailed reporting.

3. Practical Solutions:

   • Centralize transfer pricing documentation to ensure consistency.
   • Leverage benchmarking analyses for defensible pricing policies.
   • Review compliance annually to align with OECD updates.

Aligning your transfer pricing documentation with OECD standards reduces compliance risks and prepares you for audits.