by Julie Martin, Editor, MNE Tax
The OECD on June 28 published 77 responses to its request for suggestions on how to improve the OECD transfer pricing guidelines for multinational corporations, with 51 comments addressing OECD guidance on intra-group services and 26 comments covering transfer pricing dispute resolution.
The OECD invited the public comments on May 9, saying it was considering making revisions to two chapters of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration, namely, Chapter VII, titled “Special Considerations for Intra-Group Services,” and Chapter IV, “Administrative Approaches to Avoiding and Resolving Transfer Pricing Disputes.”
The OECD’s transfer pricing standards for are incorporated into the domestic laws of OECD countries and many other countries around the world.
Writing on behalf of BIAC, Will Morris said that many MNEs that have centralized intra-group services centers expend significant sums supporting audits for intra-group payments. He said the goal for this project should be to create clear, simplified, rules and safe harbors, where possible. Existing guidance should be clarified, not expanded, he said.
Morris said the OECD’s work should be coordinated with its work on the digital economy. He also said that Inclusive Framework members such as Brazil, India, and China should participate to ensure multinational implementation and uniform adoption of the rules.
In its comments, EY suggested that the OECD undertake to have its updated, simplified transfer pricing approach for low value-adding services adopted by Inclusive Framework members through the use of a multilateral general competent authority agreement. EY said that low value-adding services are a leading cause of double taxation amoung is clients.
Consultant and former OECD transfer pricing head, Joseph Andrus, said that OECD transfer pricing guidelines need to better address the challenges faced by businesses that exist primarily to provide services to third parties.
Morris, on behalf of BIAC, said that the OECD transfer pricing guidelines on cross-border tax dispute resolution should aim to enhance existing cooperative compliance programs, as such the International Compliance Assurance Program (ICAP) program and joint audits.
The OECD should improve existing practices in transfer pricing dispute resolution, not develop new ones, BIAC said.
Moreover, revised OECD transfer pricing guidance should provide best practices for countries on how to deal with the additional information gathered from country-by-country reporting, BIAC said.
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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