A local file is meant to provide detailed information with
respect to transactions entered into between the entity and its
related entities within the MNE group.
The following information is typically expected to be in the
local file to demonstrate the application of the arm's length
principle:
- information on the identity of related parties;
- relevant financial information regarding specific
transactions,
- comparability analysis,
- the selection and application of the most appropriate TP
method.
Typically, Chapter V of OECD Transfer Pricing Guidelines for
Multinational Enterprises and Tax Administrations serves as the
template (soft law) for the local file requirements in many
jurisdictions. However, many jurisdictions have their specific
requirements and variances that MNEs would need to abide by (hard
law). The local file provides the tax authorities with the
information they need to assess the risk areas, the group's
approach to transfer pricing and
