The OECD has updated its Transfer Pricing Guidelines.
The 2017 edition of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations mostly reflects a consolidation of changes from the BEPS project. It also incorporates other revisions into the old 2010 edition of the guidelines. In particular, the new guidelines incorporate content that was announced in two previously published reports: BEPS Actions 8-10 (Aligning transfer pricing outcomes with value creation) and Action 13 (Transfer pricing documentation and country-by-country reporting).
The OECD transfer pricing guidelines contain guidance on how enterprises should apply the "arm's length principle"-that is, the international consensus on how cross-border transactions between associated enterprises should be valued for income tax purposes.
There was a widespread perception by tax administrations around the world that the rules guiding the interpretation of the "arm's length" principle were inadequate and didn't properly support profit allocation within multinational enterprises. BEPS Actions 8-10 included several OECD recommendations for modifying rules regarding transfer prices for inter-company transactions that are undertaken by associated enterprises. In order to enhance transparency for tax administrations, BEPS Action 13 recommended Country-by-Country Reporting, and Master File and Local File implementation, so that administrations would have adequate information for conducting transfer pricing risk assessments and examinations.
2017 revisions to TP guidelines
The 2017 edition of the transfer pricing guidelines was released on July 10, 2017. The new guidelines mostly consolidate changes that resulted from the BEPS project and includes the following revisions to the old guidelines:
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