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Unpacking the UK's 2023 Changes to Transfer Pricing Rules


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Unpacking the UK's 2023 Changes to Transfer Pricing Rules

This blog is written and published by S&P Global Market Intelligence, a division independent of S&P Global Ratings. Lowercase nomenclature is used to differentiate S&P Global Market Intelligence credit scores from the credit ratings issued by S&P Global Ratings.

The UK has recently implemented changes to its transfer pricing rules which will have a significant impact on multinational enterprises (MNEs) with global revenues of €750 million or more. Designed to bring greater clarity and certainty around transfer pricing rules in the UK, while also ensuring compliance with international standards like the OECD Transfer Pricing Principles,[1] the updated legislation details more prescriptive requirements for transfer pricing documentation,[2] and their implementation globally across adhering countries.

Prior to the recent revisions the UK adopted a minimum standard version of the guidelines, the new measures will now reflect the full three-tiered approach to transfer pricing documentation:

  • A master file with global information about a multinational corporation group, including specific information on intangibles and financial activities, that is to be made available to all relevant country tax administrations.
  • A local file with detailed information on all relevant material intercompany transactions of the particular group entity in each country.
  • A country-by-country report of income, earnings, taxes paid, and certain measures of economic activity

The new rules will have effect for accounting periods commencing on or after April 1st, 2023 for corporation tax purposes, and for income tax purposes it will apply to the 2024/2025 tax year and subsequent years.

Under the new rules, many more businesses will need to ensure that their transfer pricing documentation is both accurate and complete. This is no easy task, especially given the complexity of modern business operations and the stringent requirements of the new UK rules.

How we can help.

At S&P Global Market Intelligence we understand the complexity and importance of transfer pricing compliance. We offer the Credit Risk Pricing (CRP) capability, an end-to-end solution to support tax authorities, auditors, tax advisors, and MNEs globally with their arm’s length assessment of intercompany financial transactions.

Our CRP solution facilitates the three-tiered approach to transfer pricing documentation, supporting the master file, local file, and country-by-country reporting, leveraging S&P Global Market Intelligence data and analytical capabilities.

To find out how S&P Global Market Intelligence can help you optimize your transfer pricing workflow visit our website or request a demo.