Pacific Tax Administrators Coordinate Transfer Pricing Documentation
Transfer pricing documentation, as a specific objective, was virtually non-existent as recently as 1982, but, two decades later, governments were requesting huge amounts of transfer pricing data from its taxpayers on an organized basis. The Pacific Association of Tax Administrators (PATA) set up a combined Transfer Pricing Documentation Package that all members could apply. The PATA members are Australia, Canada, Japan, and the United States.
The PATA Documentation Guidelines are voluntary, so taxpayers can volunteer to use the PATA Documentation Package. The taxpayer, in volunteering to use the PATA Documentation Package, does not incur any additional requirements greater than the requirements that the PATA member would impose. All four countries are members of the OECD. Each member, however, might act differently in implementing these provisions.
A taxpayer can avoid transfer pricing penalties by complying with three operative principles under the PATA Transfer Pricing Documentation Package:
- To make reasonable efforts in establishing transfer prices in compliance with the arm’s length principle.
- To maintain contemporaneous documentation as their efforts to comply with the arm’s length principle.
- To produce the documentation that a PATA member tax administrator requests on a timely manner.