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CA Final · Direct Tax Laws & International Taxation · Fundamentals of BEPS

Under the three-tiered standardised approach to transfer pricing documentation recommended in BEPS Action 13, which of the following correctly matches the document with its content?

The Master File provides a high-level overview of the MNE group's global business and transfer pricing policies for all relevant tax administrations. The Local File covers material local transactions and benchmarking, while the Country-by-Country Report gives jurisdiction-wise revenue, profit, taxes and activity data.

  1. AMaster File: high-level information on the global business operations and transfer pricing policies of the MNE group, made available to all relevant tax administrationsCorrect
  2. BLocal File: allocation of income, taxes paid and economic activity by tax jurisdiction for the whole group
  3. CCountry-by-Country Report: detailed transactions and benchmarking analysis of the specific local entity
  4. DMaster File: only the tax jurisdiction-wise revenue, profit and employee data for the MNE group

Explanation

The Master File gives a high-level overview of the group's global business, organisation, intangibles, financing and transfer pricing policies. The Local File contains entity-level material transactions and benchmarking. The CbCR gives jurisdiction-wise revenue, profit, tax and activity data. The other options swap these contents.

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