ICC Document & publication

Transfer Pricing Documentation Model (2008)

The ICC Statement entitled “Transfer Pricing Documentation: A Case for International Cooperation” was released in 2003 (“the 2003 ICC policy statement”).

Transfer Pricing Documentation: A Case for International Cooperation”

In that paper the Commission expressed its concern that multinational enterprises (MNE’s) were being punished with multiple and conflicting transfer pricing documentation policies of many countries. Meeting these compliance requirements is complex, costly and time- consuming, all done under threat of draconian non-deductible penalties. The situation is getting out of hand from a practical standpoint.

Transfer pricing documentation requirements continue to spread from country to country. These requirements reflect the anxiety of tax administrations over the protection of their tax bases and the common perception of tax administrations that MNEs minimize local income taxation through transfer pricing manipulation. Tax authorities should reasonably expect MNEs to pay a fair share of tax in each country in which they carry on business. MNEs, on the other hand, should reasonably anticipate that tax authorities will strive to deal with the issue in a uniform manner that will prevent international double taxation. Unfortunately, the natural result of separate and uncoordinated national policies is ever-increasing and divergent documentation requirements and, in consequence, an inappropriate and unnecessary compliance burden on MNEs.

This ICC policy statement proposes a set of rules allowing MNEs to prepare a single uniform package of documentation that would be considered reasonable by all involved tax authorities. Implementation of such rules would not mean that tax authorities would be forced to accept the position documented by the MNE. In some countries, the burden of proof falls on the tax administration. Even in those countries where it does not, the ICC believes that the tax administration should bear that burden of proof if the proposed standard of documentation is met.