This follows a call for comments, issued In November 2014, on a discussion draft looking at modifications to chapter VII of the Transfer Pricing Guidelines covering low value-adding intra-group services relating to Action 10 of BEPS.

The response, which came from Big Four firms, ICAEW, CIOT, the Irish Tax Institute, BASF, Siemens and a number of law firms among others, were largely positive about adding a specific section to Chapter VII containing special simplified rules relating to the allocation of low value adding intra-group services costs among members of a multinational enterprise (MNE) group. 

Deloitte said the ‘simplified approach’ proposed in the discussion draft could be helpful for businesses and tax authorities, particularly where there are many small amounts being charged for intra-group services across a wide number of countries, but warned that consistency of application will be key to making this an appropriate and practical method. 

Deloitte commented: ‘In particular, we welcome the proposal that benefits should be considered by category of services and that a single annual invoice describing a category of services would be sufficient to support the charge. This will remove the significant administrative burden in providing evidence of multiple small individual services performed.’

In its reply, CIOT said that while the institute welcomes the concept of an elective regime, as this will benefit groups which are either new to operating transfer pricing across the group or which do not have established or coherent transfer pricing methodology, it is important that groups which do have an established method or which would not benefit from the simplified approach can continue to use their established methods for transfer pricing without being inadvertently penalised. 

On the whole, Big Four firm PwC welcomed the proposals to simplify the process. In its comments PwC stated: ‘Many MNEs have centralised such low value-adding intra-group services activities and it is our experience that the current compliance burden required both to prepare detailed transfer  pricing documentation and manage the ensuing tax audits can be significantly out of proportion to the actual profit potential of the intra-group charges or the actual tax risk involved.’

The firm said that OECD’s approach to reducing the burden will achieve ‘an appropriate balance between theoretical sophistication and practical application that is commensurate with the tax at stake in the countries paying and receiving the charges'.

OECD said the input to the discussion draft will be the subject of a public consultation at the OECD Conference Centre on 19-20 March 2015, with registration and other details to be published on its website shortly. 

Full details of the comments on Action 10 of the BEPS project are here: http://www.oecd.org/ctp/transfer-pricing/public-comments-action-10-low-value-adding-intra-group-services.pdf