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13.4.2. Documentation Requirements

Disclosure Requirements

The Finance Law 2017 introduced a transfer pricing disclosure requirement formally known as “simplified documentation requirement.” This TP disclosure notice must be filed by all resident enterprises engaged in transactions with related parties, to the extent the reporting enterprise meets an annual turnover threshold to be determined by subsequent regulations. The notice must be filed in paper format or electronically, but in line with a format determined by the tax administration, within 2 months (6 months prior to 1 January 2019) following the tax return due date for the reporting year. The notice must include the following information:

  • General information on the group of companies, including any changes which may have occurred during the reporting year;
  • A list of the principal intangibles held to the extent relevant to the reporting entity, including the identification of the group entities holding the listed intangibles;
  • General description of the group's transfer pricing policy including any changes which might have occurred during the reporting year;
  • Description of the activities of the reporting entity, including any changes which may have occurred during the reporting year;
  • Listing of intra-group transactions engaged in by the local entity, as aggregated by category and including the country of establishment of the counterparty, but only to the extent the aggregated value by category exceeds a threshold to be determined by future regulations; and
  • Presentation of the transfer pricing method(s) used with a justification of its (their) appropriate nature and an indication of any changes that may have occurred during the reporting year.

Standard Documentation

The requirement to prepare and maintain a standard transfer pricing documentation consisting of a Master File and a Local File was introduced by the Finance Law 2015. Pursuant to the law, the standard documentation must be maintained and made available to the tax administration on the first day of an audit. If the documentation is lacking or is incomplete, the taxpayer may be granted a delay of 20 days to comply with the requirement. It is clarified that the submission of transfer pricing documentation does not exempt the taxpayer from providing further documentation for justifying the transaction to be at arm’s length during an audit at the request of the tax authority.

Master File

The Master File is intended to provide information on the group as a whole. It must contain the following information:

  • A general description of the group’s activities, including any changes which might have occurred during the years under audit;
  • A general presentation of the legal and operational organization of the group, including the identification of group companies engaged in related party transactions;
  • A general description of the function performed and risks assumed by related parties to the extent they affect the audited enterprise;
  • A listing of the principal intangibles owned to the extent relevant to the audited enterprise; and
  • A general description of the group's transfer pricing policy.

Local File

The Local File is intended to provide specific information on the audited local enterprise. It must contain the following information:

  • A description of the activities of the enterprise including any changes which may have occurred during the years under audit;
  • A description of transactions (including those involving royalty payments) with related entities, including their nature and the amounts involved;
  • A list of cost-sharing agreement as well as copies of any APAs or other transfer pricing rulings, to the extent material to the taxable income of the audited enterprise;
  • A presentation of the transfer pricing method(s) selected, including a justification of its appropriate nature and an analysis of the functions performed, assets used and risks assumed; and
  • An analysis of the comparable deemed pertinent by the audited enterprise.

Country-by-Country (CbC) Reporting

DRC has not introduced a Country-by-Country reporting requirement and has not yet joined the OECD’s Inclusive Framework, membership of which presupposes a commitment to implement the BEPS minimum standards, including Country-by-Country reporting.