Transfer pricing rules require transactions between companies in the same group to be priced as if the parties were independent. Most tax authorities follow the OECD Transfer Pricing Guidelines, and large groups face a three-tier documentation standard: master file, local file and country-by-country report. Management fees and intra-group services are a frequent audit target because the payer must show a real benefit and an arm's length charge.
The arm's length principle and the OECD Guidelines
The OECD Transfer Pricing Guidelines, last consolidated in January 2022, set out how to apply the arm's length principle, which the OECD describes as the international consensus for valuing cross-border transactions between associated enterprises.
National rules put this into law. India, for example, treats companies as associated at 26% or more of voting power, prescribes five methods plus any other method allowed by rule, and tests results against a range from the 35th to 65th percentile of at least six comparables, with the median applied if the price falls outside. A tolerance band of 1% for wholesale traders and 3% for others was set for assessment year 2023-24. India also applies these rules to specified domestic transactions above INR 20 crore a year, so purely domestic related-party dealings can be caught too.123456
Documentation: master file, local file and country-by-country report
BEPS Action 13 introduced a three-tier standard: a master file describing the group, a local file for each entity's transactions, and a country-by-country report for groups with consolidated revenue of EUR 750 million or more. Each country implements this in its own law, often with lower local thresholds.
The UK requires UK members of groups at the EUR 750 million threshold to keep a master file and local file in the OECD format for accounting periods beginning on or after 1 April 2023, review them at least annually and produce them on request. US-parented groups file their country-by-country report on IRS Form 8975. India sets its own thresholds for local documentation, master file and country-by-country reporting; those figures are recorded here as research drafts pending confirmation under the Income-tax Rules, 2026.789101112131415
Intra-group services and management fees
Under the OECD Guidelines a group company should be charged for a service only if it receives something it would pay an independent party for. Shareholder activities, such as the parent's own governance and investor reporting, and duplicated services are not chargeable. For low value-adding support services, the Guidelines offer an elective simplified approach with a 5% mark-up on cost, which not every country accepts.
Management fees paid from India, Saudi Arabia or other source countries also raise withholding questions, so the transfer pricing file and the withholding analysis should be prepared together. Where a tax authority adjusts a price, the MLI corresponding adjustment article, where it applies, as in the India-UAE treaty, lets the other country relieve the resulting double taxation.1617
Advance pricing agreements
An advance pricing agreement (APA) fixes the method for future years in advance. India's programme began in 2012; an APA can run for up to five years with rollback to four earlier years. India signed 220 APAs in FY 2025-26, 84 of them bilateral, taking the total to 1,035.
From 2026, taxpayers with unilateral APAs can opt into India's new safe harbour regime for future years, so groups should compare the two routes before applying.181920
| Market | Master file and local file | Country-by-country report | Research status |
|---|---|---|---|
| United Kingdom | Required for UK members of groups at the EUR 750 million CbCR threshold, periods from 1 April 2023 | Consolidated revenue of EUR 750 million | Source-checked |
| India | Local documentation above INR 1 crore of international transactions; master file above INR 500 crore group revenue and INR 50 crore transactions | Consolidated revenue of INR 6,400 crore | Research draft: confirm under Income-tax Rules, 2026 |
| United States | Not researched in this part | Form 8975 for US-parented groups; threshold not confirmed | Partly source-checked |
Decisions to make
- Does the group's consolidated revenue reach EUR 750 million?107That triggers country-by-country reporting and, in the UK, master and local file requirements.
- Which services are provided within the group, and can each payer show a benefit?16Charges without evidence of benefit are a common audit adjustment.
- Which method fits each transaction, and are comparables available?34India requires the most appropriate method and a defined comparable range.
- Would an APA or the new Indian safe harbour give more certainty for large recurring flows?1820An APA can cover up to nine years including rollback.
Documents usually needed
- Master file in the OECD Annex I format
- Local file in the OECD Annex II format for each relevant entity
- Country-by-country report or local notification
- Signed intra-group agreements for services, licences and financing
- Benchmarking studies and cost-allocation workings for management fees
- APA application and supporting analysis where pursued
Common mistakes
- Charging management fees without evidence of the services and the benefit received
- Reusing one benchmarking study across countries with different requirements
- Operating without signed intra-group agreements
- Treating a hub in the UAE or Singapore as outside transfer pricing scrutiny
- Assuming a group below EUR 750 million has no documentation obligations
Questions businesses ask
We are below EUR 750 million. Do we still need transfer pricing documentation?
Usually yes. EUR 750 million is the country-by-country reporting threshold; local documentation duties can apply at much lower levels, as India's rules show.713
How long can an Indian APA give certainty?
Up to five future years, plus rollback to up to four earlier years.18
Is a 5% mark-up on intra-group services safe?
Only for qualifying low value-adding services in countries that accept the OECD simplified approach. Other services need a full arm's length analysis.16
What this guide does not yet confirm
These points need checking with a qualified local professional before you rely on them.
- India's documentation, master file and country-by-country thresholds under the Income-tax Rules, 2026 were not confirmed; figures are research drafts based on the 1962 Rules.
- UAE and Saudi Arabia transfer pricing documentation thresholds could not be researched.
- The US country-by-country threshold is not stated on the IRS page opened.
- OECD Guidelines Chapter VII (intra-group services) and India's new safe harbour regime could not yet be checked.
- Germany and France documentation rules were not covered in this part.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 18 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
The OECD Transfer Pricing Guidelines (January 2022 edition) give guidance on applying the arm's length principle, described as the international consensus on valuing cross-border transactions between associated enterprises. The 2022 edition consolidates revised guidance on transactional profit split, hard-to-value intangibles and financial transactions.
Indian transfer pricing rules treat enterprises as associated where, among other tests, one holds 26% or more of the voting power in the other. Section 92A of the 1961 Act as described by the department; other control, loan, guarantee and board tests also apply.
Department page uses 1961 Act section numbers; 2025 Act equivalents not confirmed.
Indian law prescribes the comparable uncontrolled price, resale price, cost plus, profit split and transactional net margin methods, plus any other method prescribed by rule, and the most appropriate method must be selected. Section 92C and Rule 10AB as described by the department.
India's arm's length range for the resale price, cost plus and TNMM methods uses the 35th to 65th percentile of at least six comparables, with the median applied if the transfer price falls outside the range. Rule 10CA as described by the department; generally uses three years of data.
A notification for assessment year 2023-24 set India's transfer pricing tolerance band at 1% for wholesale trading and 3% for other cases. Within the band, the transaction price is deemed arm's length; the band for later years was not confirmed.
Indian transfer pricing rules cover specified domestic transactions only where their aggregate exceeds INR 20 crore in a year. Specified domestic transactions under the 1961 Act framework as described by the department.
BEPS Action 13 set the minimum standard of country-by-country reporting for multinational groups with annual consolidated group revenue of EUR 750 million or more, alongside the master file and local file standard. OECD/G20 BEPS minimum standard; implemented through domestic law, so local thresholds and currencies vary.
Does not show the Action 13 threshold; the UK implementation at EUR 750 million is source-checked.
UK entities that are members of an MNE group meeting the country-by-country reporting threshold must keep and preserve a master file and a local file for Corporation Tax accounting periods beginning on or after 1 April 2023. From the 2024-25 tax year for Income Tax; record-keeping obligation may sit with a 'relevant person' rather than the UK entity. Transfer Pricing Records Regulations 2023.
The UK master file and local file must be prepared in line with the OECD Transfer Pricing Guidelines of 20 January 2022, Chapter V Annex I (master file) and Annex II (local file).
The UK country-by-country reporting threshold is consolidated group revenue of EUR 750 million in the prior accounting period, and it also determines which groups must keep UK master and local files. Applies whether or not the group is UK-headed; the group must include enterprises resident in at least two jurisdictions.
HMRC's manual says 'at least EUR 750 million'; the GOV.UK guidance page (Check if you must send a country-by-country report) says 'more than EUR 750 million'. Confirm the exact test in the regulations.
HMRC expects the master file and local file to be available on request and reviewed at least annually.
US-parented multinational groups report country-by-country information to the IRS on Form 8975 and its Schedule A. US federal; the revenue threshold is not stated on this IRS page.
Under the Indian rules, the detailed local transfer pricing documentation requirement does not apply where the aggregate value of international transactions is INR 1 crore or less, though the arm's length obligation still applies. Rule 10D, Income-tax Rules 1962; Income-tax Rules 2026 equivalent not confirmed.
The portion read did not contain this threshold. Point reflects the Income-tax Act, 1961 and its CBDT guidance. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbered provisions; the corresponding 2025 Act section and any CBDT guidance re-issued under it could not yet be checked.
Under the Indian rules, a constituent entity must file a master file where consolidated group revenue exceeds INR 500 crore and its international transactions exceed INR 50 crore in aggregate (or INR 10 crore for intangibles). Rule 10DA, Income-tax Rules 1962; Income-tax Rules 2026 equivalent not confirmed.
Not shown in the portion of the department page read. Point reflects the Income-tax Act, 1961 and its CBDT guidance. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbered provisions; the corresponding 2025 Act section and any CBDT guidance re-issued under it could not yet be checked.
India's country-by-country reporting threshold is consolidated group revenue of INR 6,400 crore in the preceding accounting year. Rule 10DB, Income-tax Rules 1962; Income-tax Rules 2026 equivalent not confirmed.
Not shown in the portion of the department page read. Point reflects the Income-tax Act, 1961 and its CBDT guidance. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbered provisions; the corresponding 2025 Act section and any CBDT guidance re-issued under it could not yet be checked.
The OECD Transfer Pricing Guidelines (Chapter VII) treat an intra-group service as chargeable only if it gives the recipient economic or commercial value it would pay an independent party for, and offer an elective simplified approach for low value-adding services with a 5% mark-up on cost. Shareholder activities and duplicative services are not chargeable; the simplified approach is optional and not adopted by every country.
Chapter text not yet checked; the publication page does not describe Chapter VII. Confirm in the Guidelines.
The department's synthesised text shows MLI Articles 6 (preamble), 7 (principal purpose test), 16 (mutual agreement procedure, three-year presentation period) and 17 (corresponding adjustments) applying to the India-UAE DTAA. MLI Articles 12 and 13 (permanent establishment) are not shown as applying.
India's advance pricing agreement programme was launched in 2012; an APA can cover up to five years, with rollback to up to four earlier years. Sections 92CC and 92CD inserted by the Finance Act, 2012 with effect from 1 July 2012; the programme now runs under the Income-tax Act, 2025.
India signed 220 APAs in FY 2025-26 (136 unilateral and 84 bilateral), bringing the cumulative total to 1,035 by 31 March 2026. Cumulative: 751 unilateral and 284 bilateral.
A CBDT Office Memorandum of 24 March 2026 lets taxpayers with unilateral APAs opt into India's new safe harbour regime for future years through a 'critical assumption'. Details of the new safe harbour regime could not yet be checked.
Questions on this topic
19 statements on transfer pricing, 5 not yet checked against a source
