Effective February 10, 2025, new rules are in place that fundamentally alter the premerger notification process. The new rules increase the burden on all filing parties and will require significantly more information and documents with initial filings. It is recommended that discussions begin earlier with your legal team to identify any overlaps, supply chain relationships, and to develop key themes around transaction rationales and impacts on competition that will need to be addressed in the filing.
The above is in the context of securing favorable action on a proposed merger or other business combination, they are within the realm of potential antitrust disclosure—not transfer pricing. Looking at it objectively, a great amount of the newly required information disclosure is contained in your master file and local file documentation. As an example, under the new requirements, the company must submit business descriptions of transaction rationales, competitive overlaps, supply relationships, as well as ordinary course strategic documents presented to the CEO and/or the board of directors. Much of this information should be contained in your transfer pricing documentation. One aspect that is not within the purview of TP documentation is the planning exercises conducted by the tax department.
It is interesting to note that the requirements also outline a broad need for industry analysis and market analysis. Generally, these areas should be part of your standard TP filings, but in many cases, they are not as detailed as tax authorities would like. This weakness in documentation to fully describe the conditions the company is subject to deprives the reader of essential information supporting the results in the report.
Overall, the heighted disclosure requirements in this area parallel the global trend for more robust company disclosure of all aspects of the business. The tax department needs to be aware of what others in the company are making publicly available and to ensure conformity with their required filings. Any inconsistency will lead to additional questions, delays in resolution of issues, and potentially adjustments, additional tax and penalties. This brief outline does not capture all of the changes in the rules but should serve as a “heads up” of the changing landscape.
