Q : It is conceived that BEPS AP 13 documentation would drive centralization of TP function amongst global MNEs. How would groups operating in a decentralized manner re-align?

Kunj Vaidya (Partner and Leader, Transfer Pricing, PwC India)

AP 13 documentation was introduced with emphasis on coherence, transparency and substance. As both the master file and CbCR are group wide documents, it could be difficult for a subsidiary of a Group to prepare and maintain such documentation. Hence, it is likely that the preparation and maintenance the master file and CbCR, would require a centralised approach.

In groups where companies operate in a decentralized manner with no central / dedicated group tax functions, it could be a greater challenge to maintain the group wide CbCR and Master file. If these documents are inconsistent with the local documentation maintained in various jurisdictions, it could result in challenges in a TP audit.

Hence, on a short term basis, there would be an immediate need for the Group to carry a review of the existing TP positions on a Group wide basis, identify deviations and address it. On a long term basis, a central team with participation from the various group entities can be considered to achieve co-ordination and avoid reporting mismatches.

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