Operations & compliance
Local file
The local file is the entity-specific layer of transfer pricing documentation, setting out the material intercompany transactions of a particular local entity, the transfer pricing method applied to each, financial data supporting the analysis, and the comparables used to demonstrate that pricing sits within an arm's length.
Unlike the master file, which is largely reused across jurisdictions, the local file must be tailored to each country's specific requirements, since some tax authorities mandate additional disclosures, particular comparable search criteria, or specific financial statement reconciliations not required elsewhere in the group.
Local files should be prepared or refreshed annually, ideally alongside the year-end close, so the financial data used matches audited figures exactly, and any benchmarking study referenced is recent enough to withstand scrutiny if the tax authority requests supporting evidence during an enquiry. This matters in practice.
In practice
What matters when applying local file
- Tailor content to each country's rules
- Match financial data to audited accounts
- Refresh benchmarking studies regularly
- List all material intercompany transactions
- Keep local and master file consistent
Frequently asked
Common questions
How is a local file different from a master file?+
The local file focuses narrowly on one entity's material intercompany transactions and supporting benchmarking, while the master file describes the whole group at a higher level. This matters in practice.
How often should a local file be updated?+
Local files should generally be refreshed annually, ideally timed to align with the year-end close so figures reconcile directly with audited financial statements. This matters in practice.
See how the tooling handles this in practice
Our transfer pricing tools calculate intercompany charges, benchmark financing and reconcile the intercompany ledger from your own data. Book a short walkthrough and we will show the workflow on a scenario that matches your group structure, rather than a generic demo dataset.