The OECD has approved several amendments to the 2010 edition of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations
The amendments were made to formalize the adoption of certain Action Items of the Base Erosion and Profit Shifting ("BEPS") measures, including BEPS Actions 8-10, "Aligning Transfer Pricing Outcomes with Value Creation" and Action 13, "Transfer Pricing Documentation and Country-by-Country Reporting".
Implications of the revised OECD Guidelines need to be analyzed on a jurisdiction by jurisdiction basis, as some countries integrate the OECD Guidelines into domestic law (including by direct reference to the OECD Guidelines themselves) while other countries may require further administrative actions to incorporate the revisions into its domestic laws. Additionally, certain countries adopt a view that revisions to the OECD Guidelines simply clarify existing transfer pricing principles and hence may have a retrospective effect.
The OECD Guidelines are not explicitly incorporated into Canada's transfer pricing legislation, however, they are used by taxpayers, the CRA, and the Canadian courts to interpret and apply Section 247 of the Income Tax Act. The recommendations arising from the BEPS Actions and revisions to the OECD Guidelines provide an updated interpretation of the arm's length principle, and as stated in Canada's 2016 federal budget documents, are consistent with CRA's current interpretation and application of the arm's length principle, as reflected in its audit and assessing practices. These revisions to the OECD guidelines are thus being applied, currently, by the CRA.
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Information is current to June 21, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500.