By Julie Martin, MNE Tax
The OECD today published 40 responses to a questionnaire that asked officials whether their country has adopted transfer pricing rules for hard-to-value intangibles that are consistent with the OECD transfer pricing guidelines. Forty responses were received and published by the OECD.
The transfer pricing approach to hard-to-value intangibles aims to protect tax administrations from information asymmetry by ensuring that tax administrations can consider ex-post outcomes as presumptive evidence about the appropriateness of ex-ante pricing arrangements. Taxpayers are given the possibility to rebut this presumption.
The transfer pricing approach was developed by the OECD in response to the 2013 base erosion and profit shifting (BEPS) plan and became a part of the BEPS report for Actions 8-10, “Aligning Transfer Pricing Outcomes with Value Creation,” approved by OECD and G20 countries in 2015. This guidance was later added into the OCED transfer pricing guidelines in Section D.4 of Chapter VI.
Countries responding to the questionnaire were Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, India, Ireland, Japan, Korea, Lithuania, Luxembourg, Malaysia, Malta, Mexico, Nigeria, Netherlands, New Zealand, Norway, Peru, Poland, Portugal, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, United Kingdom, and the United States.
Among the forty questionnaire respondents, many said their country either adopted specific laws on hard-to-value intangibles or that their tax systems are set up so that the OECD transfer pricing guidelines are automatically incorporated into their laws, and thus the transfer pricing rules were adopted. Belgium, Denmark, Estonia, Ireland, Japan, and the Netherlands were among the countries responding in this manner.
Other officials responded that while their country did not have specific transfer pricing rules in place on hard-to-value intangibles, nothing was preventing these rules from being applied by the tax authorities. Examples of countries so responding were Malaysia and Portugal.
Finally, some officials clearly indicated that their country has not adopted the OECD hard-to-value intangibles approach. Included are Canada, France, Germany, and India.
Countries were also asked several questions about their approach to hard-to-value intangibles, including whether special conditions or rules applied and whether advance pricing agreements and corresponding adjustments were available to transactions involving hard-to-value intangibles.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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