Action 13 of the OECD’s BEPS Action Plan released on 19 July 2013 calls for a review of the existing transfer pricing documentation rules and the development of a template for country-by-country reporting of income, taxes and economic activity for tax administrations. An initial draft of revised guidance on transfer pricing documentation and country-by-country reporting was released by the OECD on Thur 30.1.2014.

The Draft says 3 objectives for requiring transfer pricing documentation are:

  • to provide tax administrations with the information necessary to conduct an informed transfer pricing risk assessment;
  • to ensure that taxpayers give appropriate consideration to transfer pricing requirements in establishing prices and other conditions for transactions between associated enterprises and in reporting the income derived from such transactions in their tax returns. The Draft notes that it is important for countries to keep documentation requirements “reasonable and focused on material transactions in order to ensure mindful compliance on the most important matters”; and
  • to provide tax administrations with the information that they require in order to conduct an appropriately thorough audit of the transfer pricing practices of entities subject to tax in their jurisdiction.

In order to achieve the above objectives, the Draft says countries should adopt a standardised approach to transfer pricing documentation. A 2-tier structure is suggested consisting of (i) a master file containing standardised information relevant for all MNE group members, and (ii) a local file referring specifically to material transactions of the local taxpayer.

COMMENTS should be submitted in writing to by 23 February 2014

[LTN 20, 31/1/14]