There are new OECD transfer pricing guidelines
The OECD has published new transfer pricing guidelines for MNEs and tax administrations.
In a global economy where multinational enterprises (MNEs) play a significant role, governments need to ensure that the taxable profits of these companies are not artificially shifted out of their jurisdiction and that the tax base reported by such companies in their country reflects the economic activity undertaken there. It is important for the taxpayers to reduce the risk of economic double taxation. The OECD Transfer Pricing Guidelines provide guidance on the application of the ‘arm’s length principle’, which is the international consensus on the valuation of cross-border transactions between associated enterprises.
– The most recent guidelines include revised guidance on the application of the transaction profit method and guidance for tax administrations on the application of the hardship approach to the valuation of intangible assets agreed in 2018, as well as new transfer pricing guidelines for financial transactions approved in 2020. Finally, they also introduce changes for consistency in the other OECD transfer pricing guidelines. The OECD Transfer Pricing Guidelines were approved by the OECD Council in their original version in 1995. The latest document is 658 pages long – points out Cyprian Werykowski, tax advisor, director at Thedy & Partners.