Introduction

As part of the OECD’s three-tier documentation framework (BEPS Action 13), the Master File and Local File serve as cornerstones for demonstrating arm’s length compliance.

Master File

• High-level information on global operations, intangibles, financials, and TP policies.

• Common for all jurisdictions where the MNE operates.

Local File

• Transaction-specific details relevant to each local jurisdiction.

• Includes functional analysis, method selection, and benchmarking.

OECD and Indian Framework

• India’s Rule 10D requires detailed documentation in line with OECD.

• Timely maintenance and accurate segmentation are essential.

Challenges and Best Practices

• Data availability and consistency across entities

• Coordination between global and local teams

• Customization without duplicating global policies

Conclusion

Master File and Local File documentation ensure transparency and audit readiness. Consistency and precision across both levels are key to avoiding disputes and penalties.