Transfer Pricing

Tax: OECD to Simplify Transfer Pricing Rules

According to an article published by OECD on 28.03.12, at a meeting at OECD’s first Global Forum on Transfer Pricing tax, officials from 90 countries agreed on the need to simplify transfer pricing rules, strengthen the guidelines on intangible issues and improve the efficiency of dispute resolution.

Transfer pricing rules determine how international transactions within a multinational company must be priced to ensure each country receives its fair share of tax. Based on the OECD and UN Model tax conventions, the rules are meant to eliminate double taxation and ensure better compliance by companies. These rules now need to be simplified and made more robust. This is particularly critical in the area of intangible assets, whose location may have a strong impact on tax revenues.

OECD Meets with Business Commentators on the Valuation of Intangibles for Transfer Pricing Purposes

On 7-9 November 2011, delegates from Working Party No. 6’s Special Session on the Transfer Pricing Aspects of Intangibles (“WP6-TPI”) met with private sector representatives to discuss definitional and ownership issues related to transfer pricing for intangibles. The agenda for the meeting, presentation material submitted by private sector participants and list of participants have now been published.

Presentations at the consultation focused on five topics: (i) the definition of intangibles for purposes of Chapter VI of the OECD Transfer Pricing Guidelines; (ii) the definition and treatment of goodwill for transfer pricing purposes; (iii) the definition of the term “brand” and the importance of brand in transfer pricing analyses; (iv) the appropriate approach for determining entitlement to intangible related returns for transfer pricing purposes; and (v)the importance of corporate synergies in a transfer pricing analysis.

Mr. Chris Lennon, the Chair of the BIAC Tax Committee, said that the overriding objective of the business community in connection with the project is to achieve certainty and to achieve a set of rules that will help eliminate double taxation. He pointed out that agreement on a set of consistently applied definitions was a key element in achieving those objectives. He urged the delegates not to reopen issues already clarified in the recently concluded project on business restructuring as reflected in Chapter IX of the 2010 version of the Transfer Pricing Guidelines.

2010 OECD Model Tax Convention, Transfer Pricing and updated PE definition

From the OECD site 22 July 2010 — The OECD Council today approved the 2010 versions of the OECD’s Model Tax Convention, the 1995 Transfer Pricing Guidelines and the 2008 Report on the Attribution of Profits to Permanent Establishments. The updates are the result of several years of work to improve these core OECD instruments in the area of international taxation.