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On 20 July 2022, the United Kingdom’s Government published draft legislation changes introducing new transfer pricing documentation requirements for multinational enterprise groups. This measure affects those companies subject to Country-by-Country reporting requirements in the UK, broadly, those with consolidated group revenue of at least €750 million. 


The United Kingdom had not introduced specific requirements regarding the master file or local file until this measure. Nevertheless, the UK already had broad record-keeping requirements to ensure that the related party transactions which affect taxpayers’ tax returns were correctly valued.


The main objective is to give certainty to taxpayers by implementing a standardised format as set out in OCDE’s TP Guidelines. The Master File and Local File will have to contain the information set out in Annexes I and II, respectively, to Chapter V of the OECD TP Guidelines.


It is generally expected that the documentation will have to be provided to the tax authorities upon request within 30 days, a period that has been proven insufficient for the preparation of a solid transfer pricing documentation package.


Additionally, the measure will also introduce a “summary audit trail” requirement. This implies that businesses subject to these obligations will have to complete a questionnaire detailing the main actions they have taken in preparing the transfer pricing local file. More information on how to prepare this summary audit trail is expected before these new requirements come into effect.


The measures will apply for accounting periods beginning on or after 1 April 2023.

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