The OECD today published final transfer pricing guidance for multinational groups and tax administrations detailing how to apply new transfer pricing standards on hard-to-value intangibles and profit splits. These new standards were agreed to by countries in 2015 as a result of the OECD/G20 base erosion profit shifitng (BEPS) plan.
The final report, Guidance for Tax Administrations on the Application of the Approach to Hard-to-Value Intangibles, under BEPS Action 8 is designed to reach a common understanding and practice among tax administrations on how to apply adjustments resulting from the application of the HTVI approach, the OECD said in a release.
The guidance includes examples to clarify the application of the HTVI approach and addresses the interaction between the HTVI approach and the access to the mutual agreement procedure under the applicable tax treaty.
The report, Revised Guidance on the Application of the Transactional Profit Split Method, amends guidance on the profit split method which was developed as part of Action 10 of the BEPS Action Plan.
The revised guidance retains the basic premise that the profit split method should be applied where it is found to be the most appropriate method, but expands the guidance available to help determine when that may be the case, the OECD said.
Both sets of guidance have been incorporated into the OECD Transfer Pricing Guidelines.
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