Definition:
A master file is a comprehensive background document maintained by Multinational Enterprise (MNE) groups on their global operations and transfer pricing policies.
Key Contents:
- Overview of MNE group structure, business sectors, intangibles and intercompany financial activities.
- Description of MNE’s supply chain contributions and important value drivers.
- Group’s transfer pricing planning principles and financial relations between legal entities.
Example:
During a tax audit, the revenues of an MNE’s local subsidiary were benchmarked against relevant data in its master file and country-by-country reports.
Key Takeaways:
Regularly updating the master file supports MNEs demonstrating adherence to arm’s length standards to tax authorities globally and mitigates transfer pricing controversies.