On July 10, 2017 the OECD released the 2017 edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (Transfer Pricing Guidelines).
The Transfer Pricing Guidelines provide guidance on the application of the “arm’s length principle”, which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises.
Revisions to the 2010 edition of the Transfer Pricing Guidelines
The 2017 edition of the Transfer Pricing Guidelines mainly reflects a consolidation of the changes resulting from the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project. In short it incorporates the following revisions with respect to the 2010 edition:
- The revisions introduced by the 2015 BEPS Reports on Actions 8-10 Aligning Transfer Pricing Outcomes with Value Creation and Action 13 Transfer Pricing Documentation and Country-by-Country Reporting. These amendments, to revise the guidance in Chapters I, II, V, VI, VII and VIII, were approved by the OECD Council and incorporated into the Transfer Pricing Guidelines in May 2016;
- The revisions to Chapter IX to conform the guidance on business restructurings to the revisions introduced by the 2015 BEPS Reports on Actions 8-10 and 13. These conforming changes were approved by the OECD Council in April 2017;
- The revised guidance on safe harbors with respect to Chapter IV. These changes were approved by the OECD Council in May 2013; and
- Some consistency changes that were needed in the rest of the OECD Transfer Pricing Guidelines to prepare the consolidated version of the Guidelines. These consistency changes were approved by the OECD's Committee on Fiscal Affairs on 19 May 2017.
Determination of Transfer Pricing between Associated Enterprises
The 2017 edition of the Transfer Pricing Guidelines includes the revised Recommendation of the OECD Council on the Determination of Transfer Pricing between Associated Enterprises (revised Recommendation). With the revised Recommendation the OECD intends to reflect the relevance to tackle BEPS and the relevance of establishing the Inclusive Framework on BEPS.
The revised Recommendation is also intended to strengthen the impact and relevance of the Guidelines beyond the OECD, by inviting non-OECD members to adhere to the Recommendation. Finally, it includes a delegation by the OECD Council to the Committee on Fiscal Affairs of the authority to approve - by consensus - future amendments to the Guidelines.
Full Transfer Pricing Guidelines
The full 2017 edition of the OECD Transfer Pricing Guidelines can be accessed through the link below: