The Organisation for Economic Cooperation and Development (OECD) on Thursday, 21 June 2018, released new guidance on application of the approach to Hard-To-Value Intangibles (HTVI) and the Transactional Profit Split Method (TPSM) under BEPS Actions 8 and 10, respectively.
The new guidance on the application of the approach to HTVI is aimed at harmonizing the understanding and practice among tax administrations on how to apply adjustments resulting from the application of this approach. The guidance has been formally included in the OECD Transfer Pricing (TP) Guidelines as an annex to Chapter VI, and is expected to improve consistency and reduce the risk of economic double taxation.
The revised guidance on TPSM replaces the previous text in Chapter II of the July 2017 edition of the OECD TP Guidelines. Essentially, the guidance maintains the basic rule that TPSM should be applied where it is found to be the most suitable method for determining the arm’s length price range for a controlled transaction that is being analysed. Further to this, it provides detailed guidance that would aid the determination of when TPSM is, indeed, the most appropriate TP method for a transaction.
To access the reports, please use the links below:
Revised guidance on application of profit split method
Guidance on application of the approach to hard-to-value-intangibles
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