Do I need a transfer pricing Local File for every related-party transaction?

The arm's length principle applies to every related-party transaction regardless of size — but the formal obligation to prepare detailed transfer pricing documentation (a "Local File" and "Master File") is tied to specific revenue or transaction-value thresholds set by the regulations, and is generally required only from larger groups or companies that exceed a certain volume of related-party dealings.

A smaller company below that threshold doesn't need to prepare the formal file, but it still must be able to demonstrate, if asked by the authority, that the price agreed in any related-party transaction was arm's length. "No formal file required" is very different from "no pricing responsibility at all." RASEEKH clarifies what's actually required for your company's size, not the worst-case assumption.