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OECD: Developing country implementation of transfer pricing documentation rules

OECD: Transfer pricing documentation rules

The Organisation for Economic Cooperation and Development (OECD) announced that the “Platform for Collaboration on Tax” (a joint initiative of the IMF, OECD, UN and World Bank) is seeking feedback on a draft toolkit designed to help developing countries in the implementation of effective transfer pricing documentation requirements.

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As the OECD release stated:

…transfer pricing documentation is necessary for effective implementation of transfer pricing rules. The requirement to maintain and furnish documentation encourages compliance and assists tax authorities with accessing information necessary to enforce transfer pricing regulations. It also allows tax administrations to focus efforts and to deploy limited resources on taxpayers and transactions that pose most significant risk of tax loss. However, comprehensive documentation can be costly for the taxpayer; therefore, it is important to find the right balance between the tax authorities' needs and avoiding excessive compliance costs.

The draft toolkit:

  • Is designed to support the successful implementation of effective transfer pricing documentation requirements by developing countries
  • Considers measures concerning documentation of all stages of a taxpayer's transfer pricing analysis that governments could put in place
  • Takes into account current international approaches and country practices for transfer pricing documentation
  • Discusses various policy considerations and options to guide developing countries

Comments are requested on the draft toolkit, and are requested by 8 November 2019.

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