What is global transfer pricing documentation – and why now?
Since the implementation of the Base Erosion and Profit Shifting (BEPS) initiatives by the Organization for Economic Cooperation and Development (OECD), transfer pricing documentation has transitioned from primarily a compliance matter to a fundamental “game changer” where data is used for risk mitigation and formulation of other business strategies.
Further, the BEPS framework aims to modernize tax rules, address the challenges of the digital economy and consolidate unilateral efforts to ensure multinational enterprises pay a fair share of tax wherever they operate.
As a result, multinational enterprises can get buried under the burden of requirements from the OECD, as well as various local country regulations related to transfer pricing. Failure to adhere to global transfer pricing documentation requirements, including master file and local file requirements, can lead to significant penalties for noncompliance and potentially limit taxpayers ability to resolve double taxation issues.