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OECD And Transfer Pricing Experts Discuss New Draft Texts

by Ulrika Lomas,, Brussels

29 November 2012

The Organization for Economic Cooperation and Development (OECD) recently held a summit with transfer pricing experts from governments and 100 private sector representatives to consider transfer pricing issues raised in discussion drafts on Intangibles, Safe Harbors and Timing Issues published in June.

Almost 1,400 pages of comments were received by the OECD on these topics, including 132 comment letters from business representatives.

The discussions, held over two and a half days, featured discussions focusing on:

  • Possible ways of simplifying transfer pricing compliance and enforcement, including the adoption of targeted safe harbors provisions, which provide a simple set of prescribed transfer pricing rules in connection with clearly and carefully defined transactions. These rules have been introduced by a number of nations and mainly benefit smaller taxpayers in respect of less complex transactions to slash the compliance burden; and,
  • Approaches to clarifying transfer pricing rules for transactions involving intangibles, including rules aimed at limiting the opportunities for using transfers of intangibles to gain a tax advantage by attributing income to parties that only hold the legal title to the intangible, without economically contributing to its development or maintenance.

Will Morris, Chairman of the Tax Committee of the Business and Industry Advisory Committee to the OECD, expressed appreciation for the early release of the discussion drafts and the opportunity for business to participate with a broad range of OECD and non-OECD countries in the development of revised guidance on important transfer pricing issues involving intangibles. He stressed the seriousness of issues relating to tax base erosion and profit shifting for both governments and business, and emphasized the need to address such issues within a neutral and predictable transfer pricing framework and in a way that will encourage innovative activities and economic growth.

The OECD Committee on Fiscal Affairs intends to release final guidance on safe harbors provisions and a revised discussion draft on intangibles in 2013.

TAGS: compliance | tax | business | tax compliance | tax avoidance | law | Organisation for Economic Co-operation and Development (OECD) | multinationals | tax planning | transfer pricing | regulation

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