On 5 October 2015, the Organisation for Economic Co-operation and Development (OECD) released its final report on transfer pricing documentation and country by country (CbC) reporting, an outcome of the OECD’s base erosion and profit-shifting action plan. Developed as a replacement for Chapter V (Documentation) of the OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations — last revised in 1995 — the new guidance prescribes specific documentation to be compiled by multinational enterprises to support their structuring and pricing of intercompany transactions. Specifically, the final guidance calls for taxpayers to include a list of important agreements regarding intangibles in the master file and copies of all material intercompany agreements in the local transfer pricing documentation files of their worldwide affiliates.
In this article,originally published in Tax Analyst, the authors discuss how the OECD’s final report on transfer pricing documentation and country by country reporting will affect the way multinational enterprises handle intercompany agreements to improve their documentation practices and potentially achieve efficiencies resulting in lower compliance costs.
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