The OECD today released a key update to its transfer pricing guidelines for multinationals.
The 2017 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration incorporates new transfer pricing approaches agreed to by OECD and G20 countries in the 2015 base erosion profit shifting (BEPS) plan final reports.
In particular, the 2017 guidelines make major changes to Chapter I, agreed to in the 2015 BEPS Report on Actions 8-10 Aligning Transfer pricing Outcomes with Value Creation. The changes concern fundamental transfer pricing issues, such as how to delineate a transaction and allocate risk.
Changes are made to other sections of the guidelines to reflect the new approach in Chapter I and the other BEPS changes, in particular to Chapter IX, “Transfer Pricing Aspects of Business Restructurings.”
The changes are important because countries that have transfer pricing laws generally follow the OECD guidelines to determine how to price transactions between enterprises under common ownership or control.
The 2017 OECD transfer pricing guidelines also incorporate changes made in BEPS Action 13, concerning transfer pricing documentation and country-by-country reporting. It also includes revised guidance on safe harbors approved in 2013.
This latest edition updates the 2010 version of the guidelines. The transfer pricing guidelines were originally approved by the OECD Council in 1995.