Tax authorities require MNEs to maintain contemporary documentation to prove that their internal pricing meets market standards. Following BEPS Action 13, documentation is standardly structured into a three-tiered approach.
           +-------------------------------------------------------+

           | 1. Master File                                        |
           | Global blueprint of the MNE group's overall operations|
           +---------------------------+---------------------------+
                                       |
                                       v
           +-------------------------------------------------------+

           | 2. Local File                                         |
           | Deep country-specific transactional analysis & FAR    |
           +---------------------------+---------------------------+
                                       |
                                       v
           +-------------------------------------------------------+

           | 3. Country-by-Country Report (CbCR)                  |
           | Financial matrix table for large global groups        |
           +-------------------------------------------------------+

The Master File
The Master File provides an overarching, high-level blueprint of the MNE group’s global business operations. It includes descriptions of the global supply chain, intangible asset strategies, intra-group financial arrangements, and the group’s global consolidated financial positions.
The Local File
The Local File focuses specifically on the domestic subsidiary operating within the taxing country. It provides detailed descriptions of local management structures, specific controlled transactions, financial amounts involved, a full FAR analysis, and detailed economic bench-marking studies justifying the chosen transfer pricing methodology.
Country-by-Country Report (CbCR)
Required for massive MNE groups with annual consolidated revenues exceeding a high statutory threshold (e.g., €750 million). The CbCR is a data matrix table showing for each jurisdiction: total revenue, profit before tax, income tax paid, accrued tax, accumulated earnings, number of employees, and net tangible assets.
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