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KPMG report: Summary of recent transfer pricing developments, “brave new world”

Summary of recent transfer pricing developments

A KPMG report provides a practical guide summarizing several important recent developments in the transfer pricing world.


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DEMPE (development, enhancement, maintenance, protection, and exploitation) is a relatively new concept that emerged from the 2015 base erosion and profit shifting (BEPS) project, and refers to the “substance” an entity must have to be entitled to returns from assuming risk or owning intangibles. An entity is entitled to extraordinary returns from economically significant risks and intangibles only if it performs DEMPE functions.

This KPMG report:

  • Summarizes practical considerations for multinational enterprises (MNEs) reviewing components of their end-to-end value chains to provide confidence for group members that returns related to intangible ownership or risk assumption have sufficient DEMPE functions
  • Considers headquarters service charges and examines whether transfer pricing policies associated with some types of 21st century services, such as cybersecurity and software development, need to be analyzed separately from routine and benchmarkable headquarters services such as accounting, tax, and human resources
  • Addresses tax and transfer pricing controversies resulting from unprecedented transparency; shows how thinking about managing upcoming tax conflicts must become a daily exercise; and offers practical steps to help MNEs cope with increasing transfer pricing turbulence
  • Discusses the efficacy of advance pricing agreements (APAs) as a tool to manage transfer pricing controversy and how several recent developments have made APAs both more and less compelling

Read a 2020 report* [PDF 262 KB] prepared by KPMG Global Transfer Pricing Services professionals in the United States

*This report originally appeared in Tax Notes International (27 January 2020) and is provided with permission of the publisher.

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