Transfer pricing: “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 percent 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 markets for the group’s products and services that are referred to in the second bullet point above;

– A brief written functional analysis describing the principal contributions to value creation by individual entities within the group, i.e. key functions performed, important risks assumed, and important assets used;

– A description of important business restructuring transactions, acquisitions and divestitures occurring during the fiscal year.

Information is also required regarding the MNE’s intangibles, inter-company financial activities and details of the financial statements and tax positions of the group entities.

RKG Consulting will be pleased to advise in more detail and assist in the preparation of the Master file.