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February 15, 2021

OECD, UN, IMF and World Bank Group present toolkit on the implementation of effective transfer pricing documentation requirements

Executive summary

On 17 February 2021, the Platform for Collaboration on Tax (the Platform) — a joint effort of the Organisation for Economic Co-operation and Development (OECD), United Nations (UN), International Monetary Fund (IMF) and World Bank Group (WBG) — will host a webinar to discuss their recently released toolkit (the Toolkit) designed to help developing countries with the successful implementation of effective transfer pricing documentation requirements. The webinar will feature a presentation by the Toolkit authors, followed by a panel discussion on how the Toolkit can help countries address issues in implementing effective transfer pricing documentation requirements.

The Toolkit compiles information on transfer pricing documentation and analyzes policy choices and legislative options. It states that robust transfer pricing documentation rules are a prerequisite for the effective implementation of transfer pricing rules. The Toolkit identifies measures that governments could put in place relating to the documentation of all stages of a taxpayer's transfer pricing analysis. Furthermore, it describes approaches for gathering additional transfer pricing related information, including information required in, or to be filed along with, the tax return (such as transfer pricing return schedules), and other measures such as questionnaires. The Toolkit reflects current international approaches and country practices for transfer pricing documentation and discusses various policy considerations and options to guide developing countries.

The Toolkit should not be regarded as the officially endorsed views of the organizations participating in the Platform or their member countries, but is primarily intended as a sourcebook of guidance on implementing transfer pricing documentation requirements for developing countries. In addition to the webinar, virtual learning opportunities based on the Toolkit will also be available.

Detailed discussion


The Platform was launched in April 2016 and is designed to enhance cooperation among the OECD, UN, IMF and WBG on tax matters. One of the aims of the Platform is to produce concrete joint outputs and deliverables under an agreed work plan and share information on activities more systematically. The Toolkit, which was published in January 2021, is part of a series the Platform is preparing to help developing countries in the implementation of policy options for addressing the issues in international taxation that are of greatest relevance to these countries. Prior toolkits published by the Platform include one on Taxation of Offshore Indirect Transfers1 and one on Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analyses.

Content of the Toolkit

The Toolkit is structured in five sections: (i) introduction; (ii) options for countries to implement transfer pricing documentation; (iii) specific documentation elements; (iv) conclusions; and (v) various annexes.

The first section outlines the scope of the Toolkit and provides information on the context, background and objectives of transfer pricing documentation requirements. It states that requiring multinational enterprises (MNEs) to document their transfer pricing positions enhances compliance with transfer pricing rules. It further indicates that documentation requirements are also useful for assessment and audit purposes and to encourage voluntary compliance. As such, documentation requirements are considered an integral component of the administration of any transfer pricing regime. This section also includes summaries of the country practices of a number of countries.

The second section of the Toolkit discusses various policy considerations and options relevant to designing a regime for transfer pricing documentation. It provides general considerations for design of a country's regulatory framework, including the different levels of law that will apply in practice to institute a legal obligation and the allocation of the burden of proof. Other matters covered in this section are confidentiality, timing issues, penalties and compliance incentives, accessing documents held outside the jurisdiction, and simplifications and exemptions.

The third section includes assessments of each of the different categories of transfer pricing documentation discussed in the second section (i.e., transfer pricing returns, transfer pricing studies (including master and local files), Country-by-Country (CbC) reports and questionnaires). It provides some examples of different country approaches and concludes that there are strong arguments for the adoption of transfer pricing returns or schedules and CbC reports by developing countries. However, it is recognized in the Toolkit that the resource commitment to implement these measures may not reflect the immediate needs and policy priorities of some low-capacity jurisdictions.

The Toolkit illustrates that there are clear differences in country approaches to many aspects of transfer pricing documentation (e.g., in relation to content, timing, language and filing mechanisms), other than CbC reporting.2 Although the legitimacy of these differences may be substantiated through specific circumstances and policy preferences in a country, the Toolkit acknowledges that there are benefits available to both tax administrations and taxpayers from consistency in documentation requirements. In this regard, international consistency is vital for CbC reporting, something which is aimed to be achieved through the Base Erosion and Profit Shifting (BEPS) minimum standards and peer reviews.3

The Toolkits describes CbC reports as a valuable source of information for developing countries, for example to assist tax administrations with case selection and risk assessment process. The Toolkit states that CbC Reports can also have relevance beyond transfer pricing and can assist tax administrations in identifying, at a high level, other risks relating to BEPS. However, it notes that there may be challenges for developing countries in accessing CbC reports, given the mechanisms and conditions required for the exchange of these reports. This can be addressed by developing countries by prioritizing the adoption of the requisite international exchange mechanisms, with the support of regional and international organizations.

The annexes of the Toolkit include illustrative examples of transfer pricing annual returns and countries' documentation rules. They also provide an overview of the filing obligations in selected countries and include sample primary legislation for implementing transfer pricing documentation requirements.


Transfer pricing continues to be one of the most challenging issues for tax administrations. The purpose of the Toolkit is to help countries implement effective transfer pricing documentation requirements. The increased attention on transfer pricing documentation may lead to an increase in the number of developing countries implementing or amending their transfer pricing documentation requirements. Therefore, MNEs should monitor these developments. MNEs also may want to consider attending the upcoming webinar on the Toolkit on 17 February 2021.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP (Netherlands), Transfer Pricing, Rotterdam

Ronald van den Brekel |

Marlies de Ruiter |

Coen Twigt |

Ernst & Young LLP (United States), Global Tax Desk Network, New York

Jose Bustos |

Ernst & Young LLP (United States), EMEIA Transfer Pricing Desk, New York

Ronny Waldkirch |

Ernst & Young LLP (United States), Washington, DC

Barbara Angus |


1 See EY Global Tax Alert, OECD releases the Platform for Collaboration on Tax toolkit on taxation of offshore indirect transfers of assets, dated 8 June 2020.

2 For a detailed overview of the transfer pricing legislation in over 120 jurisdictions, see EY's 2019-20 Worldwide Transfer Pricing Reference Guide.

3 See EY Global Tax Alert, OECD releases outcomes of third phase of peer reviews on BEPS Action 13, dated 29 September 2020.