OECD Discussion Drafts for Attribution of Profits to Permanent Establishments and Revised Guidance on Profit Splits
On July 7, 2016 the OECD issued the following discussion drafts, inviting interested parties to send comments by September 5, 2016:
Discussion Draft on the Revised Guidance on Profit Splits, a follow up to Actions 8-10 of the BEPS Action Plan, aims at clarifying and strengthening the guidance on the transaction profits split method in the context of global value chains, focusing primarily on transactional profit splits of actual and anticipated profits.
BEPS Conforming Changes to Chapter IX of OECD Guidelines
On July 4, 2016 the OECD invited interested parties to review the conforming changes to Chapter IX of the OECD Transfer Pricing Guidelines, on the Transfer Pricing Aspects of Business Restructurings. The conforming amendments have been prompted by the changes to the Guidelines set out in the 2015 Base Erosion and Profit Shifting (BEPS) reports, and have been agreed by Working Party No. 6 of the Committee on Fiscal Affairs. They will be incorporated in an internally consistent version of the Guidelines, expected to be finalized during 2016.
July 4, 2016
OECD Guidance on Implementation of CbC Reporting
On June 29, 2016 the OECD released Guidance on the Implementation of Country-by-Country Reporting (CbC). Under CbC, multinational enterprises are required to provide aggregate information annually, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the group. The new guidance released provides suggestions regarding transitional filing options, guidance on the application of CbC to investment funds and partnerships and the impact of exchange rate fluctuations on the agreed 750 million euro filing threshold.
June 29, 2016
OECD Council Approved Ammendments to Transfer Pricing Guidelines
On June 15, 2016 the OECD announced that the OECD Council had approved amendments to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, as set out in the 2015 BEPS Report on Actions 8-10 “Aligning Transfer Pricing Outcomes with Value Creation” and the 2015 BEPS Report on Action 13 “Transfer Pricing Documentation and Country-by-Country Reporting”. It was further announced that Working Party No. 6 of the Committee on Fiscal Affairs would soon invite interested parties to review conforming changes to Chapter IX to address inconsistencies with the revised parts of the Guidelines. The conforming changes are expected to be approved later in 2016.
June 15, 2016
IMF, OECD, UN and World Bank create Platform for Collaboration on Tax
The International Monetary Fund, Organization for Economic Cooperation and Development, United Nations and World Bank have issued a Concept Note regarding their Platform for Collaboration on Tax, created as a vehicle for enhanced cooperation between the participating organizations. The Concept Note establishes 5 areas within which output will be generated and published by the Form; (i) Develop appropriate tools for developing countries in the taxation of Multinational Enterprises, including in relation to the new measures from the BEPS reports; (ii) Support interested developing countries to participate in the implementation of the BEPS package and input into future global standard setting on international taxation; (iii) Capacity development issues; (iv) Improving awareness to build comprehensive and effective exchange of information mechanisms; and (v) Taxation and the ‘informal’ economy. The Forum also establishes as a priority of information sharing and coordination among the members, particularly regarding high-priority tax issues.
April 19, 2016
OECD Released Standardized Electronic Format for Exchange of BEPS CbC Reports
The OECD released its standardized electronic format for the exchange of Country-by-Country Reports between jurisdictions, in the form of the CbC XML Schema and the related User Guide. The information to be included in the CbC Report will be collected by the country of residence of the Reporting Entity for the multinational group, and will then be exchanged under the relevant international exchange of information agreement in the format of the CbC XML Schema. The first exchanges of the CbC Reports will start in 2018, with information on the year 2016. The User Guide further explains the information required to be included in each data element, as well as guidance on how to make corrections to data within a file.
March 22, 2016
OECD Releases Final BEPS Reports
On October 5, 2015 the OECD released the final reports created in response to the G20/OECD Base Erosion and Profit Shifting project, originally undertaken in 2013. The Explanatory Statement includes a summary of the project as well as a discussion of its significance in the context of international taxation and next steps. While all of the BEPS reports are generally relevant from a transfer pricing perspective, of particular interest are the following:
Action 1 – Address the Tax Challenges of the Digital Economy
Action 2 – Neutralise the Effects of Hybrid Mismatch Arrangements
Action 3 – Strengthen Controlled Foreign Company Rules
Action 4 – Limit Base Erosion via Interest Deductions and Other Financial Payments
Action 5 – Counter Harmful Tax Practices More Effectively
Action 6 – Prevent Treaty Abuse
Action 7 – Prevent the Artificial Avoidance of Permanent Entity Status
Actions 8-10 – Assure that Transfer Pricing Outcomes are in Line with Value Creation
Action 11 – Measuring and Monitoring BEPS
Action 12 – Require Taxpayers to Disclose their Agressive Tax Planning Arrangements
Action 13 – Re-examine Transfer Pricing Documentation
Action 14 – Make Dispute Resolution Mechanisms More Effective
Action 15 – Develop a Multilateral Instrument
Update on BEPS Action 7: Artificial
Avoidance of PE Status
the OECD issued a revised discussion draft regarding BEPS Action 7: Preventing the Artificial Avoidance of PE Status. The draft focuses in particular on new rules regarding commissionaire structures, specifically related to the wording of the OECD Model Tax Convention’s Article 5, paragraphs 5 and 6.
May 15, 2015
OECD Releases Discussion Draft of Revisions to Chapter VIII of the Transfer Pricing Guidelines
The OECD issued a discussion draft on its revisions to Chapter VIII of the Transfer Pricing Guidelines on cost contribution arrangements. The draft draws on the draft revisions to Chapters I and VI regarding risk and intangibles, respectively, relevant factors for the implementation of cost contribution arrangements, which are often used in relation to intangibles.
April 29, 2015
White Paper on Transfer Pricing Documentation
This White Paper on Transfer Pricing Documentation surveys the current state of affairs
regarding transfer pricing documentation, considers the purposes and
objectives of transfer pricing documentation, and makes suggestions as to
how transfer pricing documentation rules might be modified to make transfer
pricing compliance simpler and more straightforward, while at the same time
providing tax authorities with more focused and useful information for
consideration in connection with transfer pricing risk assessment and
transfer pricing audits.
July 30, 2013
Revised Discussion Draft on Transfer Pricing Aspects of Intangibles
On June 6, 2012, the OECD published a Discussion Draft containing proposed revisions to the OECD Transfer Pricing Guidelines on Transfer Pricing Aspects of Intangibles. Comments were received from business representatives and representatives of academia and Civil Society. A public consultation was held on the Discussion Draft in November 2012. Working Party No. 6 has now prepared this Revised Discussion Draft incorporating many changes to the original Discussion Draft.
July 30, 2013
OECD Action Plan on Base Erosion and Profit Shifting
Offers a global roadmap that will allow governments to collect the tax revenue they
need to serve their citizens. It also gives businesses the certainty they
need to invest and grow. Produced at the request of the G20 and
introduced at the G20 Finance Ministers’ meeting in Moscow, the Action Plan
identifies 15 specific actions that will give governments the domestic and
international instruments to prevent corporations from paying little or no
July 19, 2013
OECD Approves the Revision of Section on Safe Harbors in the Transfer
New guidance on safe harbors provides opportunities for
countries to relieve some compliance burdens and to provide greater
certainty for cases involving smaller taxpayers or less complex
transactions. With that, it provides a basis for countries, especially
developing countries, to design a transfer pricing compliance environment
that makes optimal use of the limited resources available.
May 21, 2013
OECD's Global Forum on Transfer Pricing Releases a Draft Handbook on Transfer Pricing Risk Assessment
The objective of this project was to produce a practical handbook that
provides clear and detailed steps countries can take to assess the transfer
pricing risk presented by an individual taxpayer's operations. The
handbook is intended to be sufficiently detailed that it can serve as a
manual for both developing and developed countries to use in conducting
transfer pricing risk assessments.
April 30, 2013
OECD Meets with Business Commentators on the Discussion Drafts on Intangibles, Safe Harbours and Timing Issues
Transfer pricing experts from governments met with more than 100 private sector
representatives to consider transfer pricing issues raised in discussion
Safe Harbours, Timing Issues
that were released for public comments on June 6, 2012.
November 23, 2012
Discussion Draft on the Transfer Pricing Aspects of Intangibles
In 2010, the OECD announced the commencement of a project on the transfer
pricing aspects of intangibles. This document, prepared by OECD Working Party No. 6, is an interim draft as it progresses
toward further detailed public comment. It contains:(i) a proposed revision
of the provisions of Chapter VI of the OECD Transfer Pricing Guidelines; and
(ii) a proposed revision of the Annex to Chapter VI containing examples
illustrating the application of the provisions of the revised text of Chapter VI.
June 6, 2012
Multi-Country Analysis of Existing Transfer Pricing Simplification Measures 2012 Update
The survey described in this document focuses specifically on simplification measures countries have adopted as part of
their transfer pricing regimes as of January 1, 2012. These include not only
safe harbours but also measures such as less stringent documentation
requirements, alleviated penalties, streamlined procedures, etc. This
document contains both an analysis of the key findings from the survey and a
compilation of the country responses.
June 6, 2012
OECD Dealing Effectively with the Challenges of Transfer Pricing
This report is concerned with the practical administration of transfer
pricing programs by tax administrations. It discusses ways in which the
management of transfer pricing programs can be optimized, so that transfer
pricing audits and enquiries are conducted efficiently and in a timely
manner. It is concerned with the practical steps tax administrations need to
take to correctly identify transfer pricing cases that merit audit or
enquiry and then to progress those cases to as early a conclusion as
OECD's Multi-Country Analysis of Existing Transfer Pricing Simplification
The OECD launched in 2010 a project on the administrative aspects of transfer pricing, including a review of techniques
that may be implemented by countries to optimize the use of taxpayers’ and
tax administrations’ resources while improving the compliance and
enforcement climate. Transfer pricing simplification measures existing in 33
OECD and non-OECD economies were identified and analyzed.
June 10, 2011
OECD Meets with Business Commentators on the Valuation of Intangibles for
Transfer Pricing Purposes
Representatives and officials from OECD and non-OECD countries met to discuss a method for the valuation of intangibles.
March 29, 2011
Releases Scoping Document for its New Project on the Transfer Pricing Aspects of Intangibles
The OECD believes that the development of
clearer and consensus based international guidance on the transfer pricing
aspects of intangibles could help limit uncertainty and risks. The Committee
on Fiscal Affairs has decided to start in 2011 a new project on the transfer
pricing aspects of intangibles.
January 27, 2011
OECD's 6th Meeting on Tax Administration - Joint Audit Report
This report was commissioned by the Forum on Tax
Administration (FTA) and sets out the findings and recommendations based on
a project to examine how international cooperation could be advanced through
the use of joint audits among Participating Countries.
September 15/16, 2010
OECD Approves the 2010 Transfer Pricing Guidelines
Chapters I-III were revised as a result of the
review of comparability and profit methods that was undertaken by the OECD,
with input from non OECD economies. New guidance was developed on the
selection of the most appropriate transfer pricing method to the
circumstances of the case, the practical application of transactional profit
methods (the transactional net margin method and the profit split method)
and the performance of comparability analyses.
In addition, the 2010 version of the Transfer
Pricing Guidelines contains a new Chapter IX on the transfer pricing aspects
of business restructurings.
July 22, 2010
Response of the Committee on Fiscal Affairs to the Comments Received on the April Discussion Draft on the 2008 Update to
the Model Tax Convention
The Committee carefully examined the
comments received and after extensive review of these comments concluded
that no major additional changes should be made to the update. It did,
however, agree that a number of useful clarifying changes were proposed and
that these should be included in the update. In addition, a few issues
raised in the comments have been identified as requiring further work. The
attached provides a brief description of the comments received and the
Committee’s response to some of them.
July 18, 2008
Final Report on the Attribution of Profits to Permanent Establishments
The Report provides guidance on the principles for attributing profits to a permanent establishment under Article 7 of the
Model Tax Convention on Income and Capital. It reflects the results of
work undertaken to examine how the principles developed in the OECD's
Transfer Pricing Guidelines for application to separate but associated
enterprises should apply in the context of the relationship
between a permanent establishment and the rest of the enterprise to which it
July 17, 2008
Improving the Resolution of Tax Treaty Disputes
Release of OECD's procedure for mandatory
arbitration of competent authority disputes that would give taxpayers the
right to litigate their disputes if they are dissatisfied with the outcome.