Transfer Pricing

How to Prepare a Dossier?

Below, we discuss the main concerns to be met when preparing a transfer pricing dossier.

1. What are the Phases of the Dossier Preparation Process?

1.1. Planning and Initial Diagnosis

• Objective: Define the scope of the file and identify relevant transactions.
• Activities:
  • Identify all related entities (domestic and international);
  • List significant intercompany transactions (goods, services, financing, IP);
  • Assess whether the transactions exceed the thresholds that require the preparation of the file;
  • Define the analysis methods to be applied (e.g., price comparable uncontrolled, cost added).

1.2. Information Collection

• Objective: Obtain all necessary data for analysis and documentation.
• Activities:
  • Obtain contracts, agreements, and documents governing operations;
  • Collect financial and accounting data from the entities involved;
  • Obtain market information, benchmarks, and databases for comparative analysis;
  • Collect information on the group’s structure, functions performed, assets used, and risks assumed.

1.3. Analysis and Evaluation

• Objective: Apply transfer pricing methods and prepare conclusions.
• Activities:
  • Analyze the comparability of related-party transactions with independent transactions;
  • Select the most appropriate method for each type of transaction;
  • Calculate adjusted prices or margins, identifying any deviations;
  • Prepare reports with the results of the analysis Analysis.

1.4. Writing the Dossier

• Objective: Document all information, analyses, and conclusions in a structured format.
• Activities:
  • Prepare a description of the company, group, and economic context;
  • Describe in detail the operations covered by the dossier;
  • Present the methods applied and justify the choice;
  • Include the comparative analysis and results;
  • Attach supporting documents (contracts, studies, financial reports);
  • Include a declaration of compliance signed by those responsible.

1.5. Review and Final Approval

• Objective: Ensure the quality and compliance of the binder before delivery.
• Activities:
  • Internal review by tax and accounting teams;
  • Validation by company management or administration;
  • Possible consultation with specialized external consultants.

1.6. Maintenance and Updates

• Objective: Update the binder as needed throughout the fiscal year.
• Activities:
  • Monitor changes in operations or legislation;
  • Update financial data and analyses as needed;
  • Prepare the file for presentation in the event of an inspection.

2. What information must be included in the Dossier?

• Group structure and description:
  • Group organizational chart;
  • Functions, assets, and risks of the entities involved;
  • Business strategies and policies.
• Detailed description of transactions:
  • Nature of transactions (goods, services, financing, IP);
  • Contractual conditions and commercial terms;
  • Volume and values ​​transacted.
• Financial and accounting data:
  • Relevant financial statements;
  • Costs, revenues, and operating margins;
  • History of prices charged.
• Comparative analysis:
  • Identification of comparable transactions in the open market;
  • Use of databases and benchmarks;
  • Justification for the choice of method and comparisons.
• Supporting documentation:
  • Contracts and agreements;
  • Economic studies and technical opinions;
  • Correspondence and reports internal.

3. Who should participate in the Dossier Preparation process?

• Finance and Accounting Department:
  • Provides financial, accounting, and administrative support.
• Tax Department:
  • Principal file coordinator;
  • Responsible for tax compliance and method analysis.
• Management and Administration:
  • Final approval and strategic support;
  • Providing information on structure and strategy.
• External consultants (when applicable):
  • Experts in transfer pricing and international taxation;
  • Technical support in analyzing and drafting the dossier.
• Other departments (e.g., Commercial, Legal):
  • Providing information on contracts, commercial terms, and legal structure.

Final Notes:

If you wish to prepare the Dossier internally, consult the applicable legislation, involve your organization’s financial experts, especially those with the most knowledge of tax matters, and get to work.

However, keep in mind that this dossier must comply with certain specific standards and procedures defined in tax and related legislation, so the involvement of experts is essential. This involvement may be more or less involved (different scenarios may include: brainstorming sessions, document review, information compilation, dossier preparation, planning the group’s organizational structure and relevant transactions, etc.).