What is included in the fee for transfer pricing — local file?
The local file for one entity: functional analysis, method selection with the alternatives explained, comparables with the search documented, and the results tested against the range.
What would make transfer pricing — local file cost more than the standard tier?
The number of transaction types. Goods, services, royalties and financing are four analyses rather than one, and each needs its own method and its own comparables.
Is the fee really fixed?
Yes, for the scope quoted. If the scope changes — another year appears, an entity turns up, a certificate becomes necessary — we re-quote before doing the work, so there is never an invoice you have not already agreed to.
What is the difference between a local file and a benchmarking study?
The local file is the broader documentation package describing the local entity, its related-party transactions and the functional analysis behind them, while the benchmarking study is typically one component within it supporting the pricing of a specific transaction category — a local file can contain several benchmarking studies for different transaction types.
Does every related-party transaction category need its own section in the local file?
Generally yes, since each category — services, financing, licensing, goods — has its own functional and economic analysis, and combining several genuinely different transaction types into one undifferentiated section tends to weaken the documentation rather than simplify it.
How does a local file relate to a group's master file?
The master file describes the group's overall structure and policies, while the local file applies that context to the specific local entity's own transactions — the two need to be consistent with each other, since a local file that contradicts the master file's description of group policy is an obvious inconsistency for a reviewer to raise.
Can a local file be prepared before the financial year it covers has ended?
A local file is generally finalised once the year's actual financial results and transaction data are available, though the functional analysis and much of the descriptive content can be prepared in advance — contemporaneous documentation means having it ready close to when the return is filed, not necessarily before the year closes.
What is transfer pricing?
The meaning of transfer pricing is narrow and specific: it is how related companies in a group price what they sell each other — goods, services, financing, the use of intellectual property. Tax law requires those prices to be what independent parties would have agreed, the arm's length principle, so profit is not simply moved to a lower-taxed country. Canada tests it under s.247, the US under s.482, India under s.92, and each expects documentation prepared contemporaneously. See transfer pricing documentation.
What is a transfer pricing policy, and is it the same as documentation?
No. The policy is the forward-looking statement of how your intercompany prices are set — which method for which transaction, which comparables, what happens when margins drift. The documentation is the backward-looking evidence that the policy was applied and produced an arm's length result for that year. Authorities read both, and a policy that the intercompany invoices do not actually follow is worse than none, because it establishes what you knew you should have done. See do you need documentation.
