An overview of the transfer pricing documentation requirements and penalties in Europe, Asia Pacific and America

The OECD has long attempted to create a harmonized playing field for transfer pricing documentation, although countries have only recently started to apply a more consistent approach based on the recommendations provided. Nonetheless, content, threshold, notification, and submission deadlines differ from country to country. It appears clear how the disharmonized documentation approach in terms of content and structure, even within the same macro areas, makes it more difficult for multinational companies to reduce compliance costs.

A possible way to encourage companies to comply with the transfer pricing documentation request is to design tax incentives or ensure taxpayer protection from administrative penalties. Otherwise, penalties are imposed on transfer pricing adjustments to encourage entities to implement policies in line with the arm’s length principle.

This article identifies the different types of documentation requirements in the three macro-areas analyzed (i.e., Pan Europe, Asia-Pacific and America) and it explains the thresholds used for the different taxpayers’ obligations. In addition, it provides an overview of the administrative penalties imposed.

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