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OECD Launches Transfer Pricing Public Consultation Agenda

by Ulrika Lomas, Tax-News.com, Brussels

30 October 2013


The Organization for Economic Co-operation and Development has released a draft agenda for a two-day public consultation on transfer pricing scheduled for next month, at which the body will look at issues relating to the Base Erosion and Profit Shifting Action Plan and the pricing of intangibles.

The BEPS Action Plan directs the OECD to develop a system of country-by-country reporting of group financial information about high-level Multinational Enterprises to tax authorities. Matters to be considered at the consultation include: what information should be reported and when; who should receive the information; and how much information should be shared among relevant governments. The last issue raises concerns regarding non-cooperative governments, incomplete treaty information exchange obligations, and the need to protect confidential taxpayer information.

The Action Plan also requires specific documentation, and the consultation will look at issues arising from a White Paper on Transfer Pricing Documentation that was published in July. Areas to be discussed include: the implementation of a standardized two-tier documentation system; the use and content of a global master file; mechanisms for limiting early reporting to information useful in risk assessment (with subsequent opportunity for governments to obtain further detailed information for auditing purposes); the development of materiality standards; the implementation of consistent documentation formats across countries; and mechanisms for minimizing unnecessary compliance burdens.

More generally, the consultation will ask how the BEPS Project should approach a number of subjects, including: hard-to-value intangibles, particularly transfers of partially developed intangibles; risk allocations that may give rise to separation of income from relevant economic activity; the role of approaches outside the arm's length principle; the recharacterization of transactions; global value chains and profit split approaches; and financial transactions.

The consultation will also follow up on a Revised Discussion Draft on Transfer Pricing Aspects of Intangibles, which was also published in July. Issues on the agenda include: changes to the definition of intangibles; the usefulness of the term "marketing intangibles"; the treatment of goodwill and on-going concern value; the treatment of location savings and local market features; the treatment of an Assembled Workforce; and the treatment of group synergies.

Particular attention will be paid to "Section B" of the Revised Draft, which was substantially re-written. This part includes: outsourcing arrangements; the treatment of important functions; the treatment of funding for intangible development; and guidance on the use of corporate trade names.

The consultation will take place at the OECD Conference Center in Paris on November 12-13, and will be broadcast on the internet. All interested parties are invited to register to attend via the OECD website, and country delegates to Working Party No. 6 of the OECD Committee on Fiscal Affairs will be present.

TAGS: Organisation for Economic Co-operation and Development (OECD) | transfer pricing

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