Preparation of transfer pricing tax documentation is a formal legal requirement imposed by tax legislation and includes the writing of document in which the transaction or sum of transactions to be reported should be described based on the following scope of information:
- definition of roles played by entities involved in the transaction (including assets used and risks taken ),
- identification of all anticipated costs related to the transaction and the form and date of payment,
- description of the method and manner of profit calculation and determination of the transaction price,
- determination of the economic strategy and other related activities – where the value of the transaction was influenced by the strategy adopted by the entity,
- indication of other relevant factors,
- determination of benefits expected by the entity obliged to prepare documentation, associated with obtaining benefits – in the case of contracts for provisions (including services) of an intangible nature.
Preparation of transfer pricing tax documentation can be difficult to management, so you should have it drawn up by a qualified expert.