Transfer Pricing - the global divergences regarding the documentation requirements

Abstract

The globalization, the international trade and the number of multinational enterprises have continued to increase over the last decade and today over 70 percent of the cross-border transactions take place between related enterprises. The growth of multinational enterprises which are doing cross-boarder transactions present increasingly complex taxation issues, both for the tax administrations and the companies themselves. International transfer pricing deals with those intra-group transactions where the open market regulator is absent. Transfer pricing has grown to be the most important issue on the tax agenda of multinational enterprises.

During the last decades fundamental principles have developed on different levels in the global environment and as the subject is international, differences among these guidelines and regulations are of great importance. This theises discuss the divergences of the three big guidelines produced by the Organization for economic co-operation and development (OECD), the Pacific Association of Tax Administrators (PATA) and the European Union (EU), in particular the requirements of documentation, the different methods of arm’s length principle and the penalties available. With this background, the Swedish regulation will be regarded and examined. Mainly how this corresponds with the three guidelines and how have the Swedish regulators chosen to deal with the issues around documentation requirements and the principle of arm’s length.