The Organisation for Economic Development and Cooperation (OECD) is inviting comment to its white paper on transfer pricing in which it considers the objectives of transfer pricing documentation and suggests how transfer pricing documentation rules might be modified to make transfer pricing compliance simpler and more straightforward.
The paper calls for multi-national companies to provide tax authorities with more focused and useful information for consideration in connection with transfer pricing risk assessment and transfer pricing audits.
The document is intended to initiate an international discussion of ways in which compliance with transfer pricing documentation requirements can be made simpler and more straightforward and is part of broader plans to restructure a global tax regime in which outdated rules have allowed multinational companies to avoid tax in their cross-jurisdictional activities, resulting in wide-scale erosion of domestic economies' tax revenue bases.
The paper will be integrated with the work on transfer pricing documentation identified in the Base Erosion and Profit Shifting (BEPS) Action Plan - an initiative of the OECD and one of the points in its 15-point BEPS Action Plan, mandated by the G8 in its 18 June Communique of the G8 Lough Erne Summit.
The paper notes that clear and accurate understanding of transfer pricing risk features will often require more information of a 'big picture' nature than is often obtained through existing individual country focused documentation requirements and suggests a two-tiered approach through which both the 'big picture' information is made available for risk assessment purposes and detailed information on the related party transactions can be required when the arm's length character of specific transactions needs to be assessed.
The OECD's Committee on Fiscal Affairs (CFA) believes that it is essential to obtain input from the business community and from other interested non-governmental parties on these topics and has issued its white paper as a first step in soliciting public comments.
Interested parties are invited to send comments on the White Paper on Transfer Pricing Documentation by 1 October 2013. Comments are also welcome on the most appropriate means of implementing the transfer pricing documentation directives of the BEPS Action Plan.
Comments should be sent in to [email protected].
A public consultation on this White Paper and other transfer pricing matters is expected to be held at the OECD Conference Centre in Paris, France on 12 - 13 November 2013.
To view the white paper, go HERE
