handbook-tb

Transparency and disclosure(b) A documentation regime that includes benefits for complianttaxpayers may increase the actual compliance ofa taxpayer with the documentation rules, resulting in afavourable outcome for the country. For example, if taxpayerswho meet documentation requirements receive somemeasure of penalty protection or a shift in burden on someor all issues, there will be added taxpayer incentive forupfront conformity with the documentation requirements.Confidentiality: As the prospect of increased disclosure of informationbecomes more likely, taxpayers are expressing greater concernregarding confidentiality. The draft urges tax administrations to protecttaxpayers from public disclosure of trade secrets, scientific secretsand other confidential information. The need for protection shouldlead countries to carefully consider their requests for such informationand to provide assurances to the taxpayer regarding confidentiality.To the extent that public court proceedings or judicial decisions willentail some measure of disclosure, confidentiality should be preservedto the extent possible and disclosure should be as limited as possible.Implementation:(a) Changes to domestic law: Tax law, including transfer pricingrules, are a function of domestic law. Thus, in orderto achieve the benefits of increased uniformity underAction 13 (as well as the widespread adoption of best practicesadvocated by the Discussion Draft), countries willneed to make changes to their own domestic law. Thus, forexample, countries would need to enact transfer pricing anddocumentation rules that require their locally based MNEaffiliates to produce information required for the masterfile, CbC template and local file (as detailed in the threeannexes attached to the Discussion Draft). Given the generalimportance of consistency, and the need for master fileinformation to be consistent across jurisdictions, countriesshould review their own domestic rules. The goal would bedomestic rules that require production of information forthe master file that conforms to the Discussion Draft annex(detailing the information in both the master file and theCbC reporting template).519