Documentation
Master files, local files, intercompany agreements, and the contemporaneous record that decides whether a position survives the first information request
Documentation is the part of transfer pricing that every group produces and almost nobody reads until it matters. A local file is usually treated as an annual compliance deliverable — refreshed, filed, forgotten. Then an information request arrives, and that file becomes the single document deciding whether a position is defended or conceded.
This cluster covers transfer pricing documentation in working detail — how to build a local file that holds up, how the master file and country-by-country report interact with it, why intercompany agreements carry more weight than most groups realize, and what contemporaneous really means for penalty protection. Written for the in-house teams who own the file and the practitioners who prepare it.
How to build a transfer pricing local file that holds up.
Most local files are written to be filed, not defended — last year’s template with new numbers. The structure of a local file built to withstand the first information request, section by section, and the eight gaps examiners find first.
Read the full article →In this article
- The binder problem
- What a local file is actually for
- Organizational structure: who really decides
- Controlled transactions: where contract meets conduct
- Functional analysis: specific, not generic
- Method selection and the financial analysis
- Contemporaneity: the timing that decides penalties
- Eight gaps examiners find first
Six pieces, each on one part of the work.
The pillar above is the comprehensive starting point. The articles below go deeper on individual elements — the master file, intercompany agreements, penalty protection, country-by-country reporting, requirements across jurisdictions, and the annual roll-forward.
Master file vs. local file: what goes where
The two documents are meant to work together, and in most groups they quietly contradict each other. What belongs in each, where the overlap creates risk, and how to keep them consistent year to year.
Intercompany agreements: the document your local file rests on
Tax authorities now start from the contract and test it against conduct. Why a missing or stale agreement undermines everything built on top of it, and what a defensible agreement actually needs to say.
Contemporaneous documentation and U.S. penalty protection
The 30-day rule, the ten principal documents, and why a study finished after the return is filed may protect nothing at all. What §6662(e) actually demands, in working detail.
Country-by-country reporting: what your data tells the tax authority
CbCR was built as a risk-assessment tool, and authorities use it exactly that way. The ratios examiners compute from Table 1, the patterns that trigger questions, and how to get ahead of them.
Documentation requirements around the world: thresholds, deadlines, and traps
Local file obligations diverge more than most groups assume — in thresholds, filing versus retention, language, and timing. A practical map of where the requirements differ and where the penalties bite.
Rolling forward a local file: what to update every year, and what not to
Most local files are last year’s document with new numbers. What genuinely has to be refreshed annually, what can safely roll forward, and the changes that should trigger a full rebuild.