Elevate Compliance Standards with TPverse’s Transfer Pricing Master File Expertise
Compliance and documentation require more care than ever before as tax authorities become more watchful of transfer pricing. With TPverse in-depth understanding of international transfer pricing legislation, they can help with the preparation of comprehensive file reports that adhere to national laws. To lower the danger of lawsuit, they will also assist in preparing your company’s master file compliance and yearly evaluation of your transfer pricing master file.
The transfer pricing master file is an important part of transfer pricing compliance. The Transfer Pricing master file focuses on describing the context in which intercompany transactions take place. The transfer pricing master file is prepared at group level, whereas local files are prepared at company or country level.
Understanding BEPS Action 13 and the Master File Requirement
The Master File, which is a component of BEPS Action 13 master file, gathers standard data at the business group level about the nature of their international transactions, their transfer pricing practices, how their profits are distributed, and their economic activity across borders.
The parent firm, or the enterprise level, compiles the master file. The master file should be provided to tax authorities in the jurisdictions where the MNE conducts business, according to OECD standards, and many tax authorities have made the master file mandatory under their own legislation.
Significance of BEPS Action 13 Master File
The OECD’s goals in adopting new BEPS guidelines were to increase transparency and standardize the documentation taxpayers are required to provide to ensure tax authorities have the necessary information to assess transfer pricing policies.
To address these goals, the BEPS guidelines established a three-tiered approach for documenting intercompany transactions, requiring companies to prepare a master file, a local file, and a country-by-country report. This tiered documentation is intended to provide tax authorities in all jurisdictions with the context required to verify compliance.
This standardized approach also seeks to achieve three objectives. The first is for companies to self-assess compliance with the arm’s length principle. The second is to provide tax authorities with a means of identifying potentially risky transfer pricing, while the third is to provide them with a specified level of information about the taxpayer in the event of an audit.
Components of Master File
The master file consists of the –
The master file provides a global overview of the enterprise’s transfer pricing. It includes high-level information about the company’s global operations and transfer pricing policies such as
- Organizational structure
- Geographic locations of operations
- Main value/profit drivers
- Descriptions of business activities of business units (products and services)
- Intangible assets
- Intercompany financing
- Enterprise financials and tax positions
Compliance Requirements and Recommendations
Part A and Part B reporting are required under India’s Master File reporting regulations.
- There is no financial threshold for filing the Master File, Part A, which is required by all Indian IG businesses.
- If the following thresholds are reached, Part B of the Master File’s detailed reporting becomes relevant:
- Aggregate value of: a. International transactions exceeding INR 50 Crores; or b. intangible transaction exceeding INR 10 Crores; and
- Consolidated group revenue exceeding INR 500 Crores.
Compliance Standards for Master File Documentation
Respecting the Master tp document requirements is not just required by law, but also by strategy. MNEs have to actively welcome these reporting requirements as a chance to demonstrate openness, encourage cooperation with tax authorities, and lessen the likelihood of disputes. The master file represents an opportunity to explain transfer pricing policy to tax authorities. What’s most important in preparing the master file, aside from including the required documentation, is avoiding risk. Discrepancies or contradictions between information in the master and local files increase audit risk, so it’s critical to make sure the descriptions that are provided in the files are consistent.
In a time of heightened scrutiny, being well-versed in the compliance landscape guarantees not just compliance with regulations but also the maintenance of the multinational enterprise’s standing and long-term viability in the international arena.
BEPS Master File Requirements Across Jurisdictions
A (country-by-country) CbCr master file report containing aggregate data on the worldwide distribution of income, profit, taxes paid, and economic activity among the tax countries in which it operates must be prepared by all big multinational enterprises (MNEs) in accordance with BEPS Action 13 master file. The tax administrations in these jurisdictions receive access to this CbC report for use in BEPS risk assessments and high level transfer pricing analyses.
TPverse’s Expertise in Transfer Pricing Master File Preparation and Compliance
TPverse is a global corporation that specializes in master file transfer pricing documentation, with a team of highly qualified individuals from all over the world. You can avail the exclusive master file transfer pricing services with the help of TPverse expertise in master file preparation.
Contact them at info@tpverse.in for the best transfer pricing master file.
Partner With TPverse for Master File Compliance Excellence
TPverse is able to scan the horizon for new and quickly emerging requirements in order to manage master file transfer pricing documentation efficiently and effectively. Their experts also have the knowledge, access to information, and ability to interpret the impact of existing compliance requirements.