Editing Transfer pricing (section)

===Penalties and documentation===
Some jurisdictions impose significant penalties relating to transfer pricing adjustments by tax authorities.  These penalties may have thresholds for the basic imposition of penalty, and the penalty may be increased at other thresholds.  For example, U.S. rules impose a 20% penalty where the adjustment exceeds US$5 million, increased to 40% of the additional tax where the adjustment exceeds US$20 million.<ref>[https://www.law.cornell.edu/uscode/text/26/6662-26 USC 6662].  A second threshold based on the relative magnitude of the adjustment may also applyl.</ref>

The rules of many countries require taxpayers to document that prices charged are within the prices permitted under the transfer pricing rules.  Where such documentation is not timely prepared, penalties may be imposed, as above.  Documentation may be required to be in place prior to filing a tax return in order to avoid these penalties.<ref>[http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&rgn=div8&view=text&node=26:13.0.1.1.1.0.16.256&idno=26 26 CFR 1.6662-6].</ref>  Documentation by a taxpayer need not be relied upon by the tax authority in any jurisdiction permitting adjustment of prices.  Some systems allow the tax authority to disregard information not timely provided by taxpayers, including such advance documentation.  India requires that documentation not only be in place prior to filing a return, but also that the documentation be certified by the chartered accountant preparing a company return.