Tag: Master file

The final BEPS report on Action 13 (2015) on transfer pricing documentation included a reporting requirement for groups with turnover above a specified threshold prepare a master file to supply general information on the group of which the taxpayer is a member, including a description of the group and its organizational structure, a description of its business, intangibles employed, intragroup financial activity and the financial and tax position of the group.

TPG2022 Chapter V Annex I

Annex I to Chapter V Transfer Pricing Documentation – Master file The following information should be included in the master file: Organisational structure Chart illustrating the MNE group’s legal and ownership structure and geographical location of operating entities. Description of MNE group’s business(es) General written description of the MNE group’s business including: –     Important drivers of business profit; –      A description of the supply chain for the group’s five largest products and/or service offerings by turnover plus any other products and/or services amounting to more than 5% of group turnover. The required description could take the form of a chart or a diagram; –      A list and brief description of important service arrangements between members of the MNE group, other than research and development (R&D) services, including a description of the capabilities of the principal locations providing important services and transfer pricing policies for allocating services costs and determining prices to be paid for intra-group services; –      A description of ... Read more

TPG2022 Chapter X paragraph 10.124

A potential difficulty for tax administrations in analysing cash pooling arrangements is that the various entities in a cash pool may be resident across a number of jurisdictions, potentially making it difficult to access sufficient information to verify the position as set out by the taxpayer. It would be of assistance to tax authorities if MNE groups would provide information on the structuring of the pool and the returns to the cash pool leader and the members in the cash pool as part of their transfer pricing documentation. (See Annex I to Chapter V of these Guidelines about the information to be included in the master file) ... Read more

TPG2022 Chapter X paragraph 10.36

The analysis of the business strategies will also include consideration of the MNE group’s global financing policy, and the identification of existing relationships between the associated enterprises such as pre-existing loans and shareholder interests (see Annex I to Chapter V of these Guidelines about the information to be included in the master file) ... Read more

TPG2022 Chapter V paragraph 5.21

Annex I to Chapter V of these Guidelines sets out the information to be included in the master file ... Read more

TPG2022 Chapter V paragraph 5.20

Taxpayers should present the information in the master file for the MNE group as a whole. However, organisation of the information presented by line of business is permitted where well justified by the facts, e.g. where the structure of the MNE group is such that some significant business lines operate largely independently or are recently acquired. Where line of business presentation is used, care should be taken to assure that centralised group functions and transactions between business lines are properly described in the master file. Even where line of business presentation is selected, the entire master file consisting of all business lines should be available to each jurisdiction in order to assure that an appropriate overview of the MNE group’s global business is provided ... Read more

TPG2022 Chapter V paragraph 5.19

The information required in the master file provides a “blueprint” of the MNE group and contains relevant information that can be broken down into five categories: a) the MNE group’s organisational structure; b) a description of the MNE group’s business or businesses; c) the MNE group’s intangibles; d) the MNE group’s intercompany financial activities; and e) the MNE group’s financial and tax positions ... Read more

TPG2022 Chapter V paragraph 5.18

The master file should provide an overview of the MNE group business, including the nature of its global business operations, its overall transfer pricing policies, and its global allocation of income and economic activity in order to assist tax administrations in evaluating the presence of significant transfer pricing risk. In general, the master file is intended to provide a high-level overview in order to place the MNE group’s transfer pricing practices in their global economic, legal, financial and tax context. It is not intended to require exhaustive listings of minutiae (e.g. a listing of every patent owned by members of the MNE group) as this would be both unnecessarily burdensome and inconsistent with the objectives of the master file. In producing the master file, including lists of important agreements, intangibles and transactions, taxpayers should use prudent business judgment in determining the appropriate level of detail for the information supplied, keeping in mind the objective of the master file to provide ... Read more

TPG2022 Chapter II paragraph 2.173

In addition to the Local File, which should contain a detailed functional analysis of the taxpayer and its relevant associated enterprises, the MNE group’s Master File might be a useful source of information relevant to the determination of appropriate profit splitting factors. As is set out in Annex I to Chapter V, the Master File should include information on the important drivers of business profit, the principal contributions to value creation by entities within the group, and key group intangibles. However, it should be borne in mind that the Master File is intended only to provide a high-level overview of an MNE group, and not granular or detailed information as to all of the group’s transactions ... Read more
Mexico vs "TP doc-Lawsuit", June 2019, Supreme Court, Case No. 14039/17-17-10-3/2502/18-PL-07-04

Mexico vs “TP doc-Lawsuit”, June 2019, Supreme Court, Case No. 14039/17-17-10-3/2502/18-PL-07-04

In this case a group of taxpayers filed a lawsuit for the nullity of the new Mexican transfer pricing documentation obligations introduced in 2017 by rules 3.9.11, 3.9.14, 3.9.15, 3.9.16 and 3.9.17 of the First Resolution of Amendments to the Tax Miscellaneous published in the Official Gazette of the Federation, issued by the Head of the Tax Administration Service. Article 76-A of the Mexican Income Tax Law states that the taxpayers referred to in Article 32-H, Sections I, II, III and IV of the Federal Tax Code who enter into transactions with related parties must provide the tax authorities with annual related party information returns: 1) master file; 2) local file and 3) a country-by-country report. This three tiered documentation package provides the tax authorities with information related to transactions between related parties on transfer pricing, in order to identify conduct that could imply a risk of tax avoidance or evasion, improve the exchange of information with authorities of the ... Read more

TPG2018 Chapter II paragraph 2.173

In addition to the Local File, which should contain a detailed functional analysis of the taxpayer and its relevant associated enterprises, the MNE group’s Master File might be a useful source of information relevant to the determination of appropriate profit splitting factors. As is set out in Annex I to Chapter V, the Master File should include information on the important drivers of business profit, the principal contributions to value creation by entities within the group, and key group intangibles. However, it should be borne in mind that the Master File is intended only to provide a high-level overview of an MNE group, and not granular or detailed information as to all of the group’s transactions ... Read more

TPG2017 Chapter V Annex I

Annex I to Chapter V Transfer Pricing Documentation – Master file The following information should be included in the master file: Organisational structure Chart illustrating the MNE’s legal and ownership structure and geographical location of operating entities. Description of MNE’s business(es) General written description of the MNE’s business including: –     Important drivers of business profit; –      A description of the supply chain for the group’s five largest products and/or service offerings by turnover plus any other products and/or services amounting to more than 5% of group turnover. The required description could take the form of a chart or a diagram; –      A list and brief description of important service arrangements between members of the MNE group, other than research and development (R&D) services, including a description of the capabilities of the principal locations providing important services and transfer pricing policies for allocating services costs and determining prices to be paid for intra-group services; –      A description of the main geographic ... Read more

TPG2017 Chapter V paragraph 5.21

Annex I to Chapter V of these Guidelines sets out the information to be included in the master file ... Read more

TPG2017 Chapter V paragraph 5.20

Taxpayers should present the information in the master file for the MNE as a whole. However, organisation of the information presented by line of business is permitted where well justified by the facts, e.g. where the structure of the MNE group is such that some significant business lines operate largely independently or are recently acquired. Where line of business presentation is used, care should be taken to assure that centralised group functions and transactions between business lines are properly described in the master file. Even where line of business presentation is selected, the entire master file consisting of all business lines should be available to each country in order to assure that an appropriate overview of the MNE group’s global business is provided ... Read more

TPG2017 Chapter V paragraph 5.19

The information required in the master file provides a “blueprint” of the MNE group and contains relevant information that can be grouped in five categories: a) the MNE group’s organisational structure; b) a description of the MNE’s business or businesses; c) the MNE’s intangibles; d) the MNE’s intercompany financial activities; and (e) the MNE’s financial and tax positions ... Read more

TPG2017 Chapter V paragraph 5.18

The master file should provide an overview of the MNE group business, including the nature of its global business operations, its overall transfer pricing policies, and its global allocation of income and economic activity in order to assist tax administrations in evaluating the presence of significant transfer pricing risk. In general, the master file is intended to provide a high-level overview in order to place the MNE group’s transfer pricing practices in their global economic, legal, financial and tax context. It is not intended to require exhaustive listings of minutiae (e.g. a listing of every patent owned by members of the MNE group) as this would be both unnecessarily burdensome and inconsistent with the objectives of the master file. In producing the master file, including lists of important agreements, intangibles and transactions, taxpayers should use prudent business judgment in determining the appropriate level of detail for the information supplied, keeping in mind the objective of the master file to provide ... Read more