Transfer pricing documentation is essential for companies that deal with its related parties established in different countries. Although income tax authorities only require companies with large turnovers to prepare such documentation to be submitted, it is often encouraged to prepare transfer pricing documentation as a defensive and pricing strategy.
When faced with tax queries or complaints from adversaries, it would be good that contemporaneous documentation had been done to defend against allegations of transferring profits or tax evasion charges.
Companies that look at their pricing policies by benchmarking against other companies also allow for the finance team to assess the competitions as well as analyse the activities of rival companies.