by Julie Martin, MNE Tax
This article was updated 4/16/2019.
The UN has released draft updates to the United Nations Practical Manual on Transfer Pricing for Developing Countries — including a key chapter on financial transactions — and other papers in advance of the Eighteenth Session of the Committee of Experts on International Cooperation in Tax Matters, to be held at UN headquarters in New York on April 23–26.
This follows the UN’s earlier release of documents proposing updates to the UN Model Double Taxation Convention between Developed and Developing Countries.
UN transfer pricing manual
The new chapter on financial transactions, prepared by a 27-person subcommittee for review by the full committee, addresses measures against base erosion, steps to delineate the arm’s length nature of a loan, guarantees, the application of the most appropriate transfer pricing method, cash pooling, captive insurance, and many other topics. (Update: For an in-depth report on this draft chapter, see The UN transfer pricing manual’s new chapter on financial transactions: the details by Pilar Barriguete & Edland Graci, Duff & Phelps, Spain.)
Proposed revisions to the UN transfer pricing manual’s guidance on the transactional profit split method were also released. The goal is to make the UN work more consistent with OECD transfer pricing work.
Minor changes are also proposed to UN transfer pricing manual sections titled Establishing Transfer Pricing Capability in Developing Countries, Risk Assessment, and Transfer Pricing Audits.
The UN Committee of Experts aims to incorporate the transfer pricing work into a planned 2021 update of the UN transfer pricing manual.
UN Committee of Experts agenda
The UN Committee of Experts also released its meeting agenda, which indicates that, addition to transfer pricing issues, the committee will discuss the next update of the UN Nations Model Double Taxation Convention between Developed and Developing Countries. This will include discussion of the taxation of royalties and collective investment vehicles, the agenda says.
The meeting will also cover updates to UN tax committee’s handbooks on extractive industries and tax treaty negotiation. Further, the controversial issue of the taxation of the digitalized economy will be discussed as it relates to developing countries. Tax dispute avoidance and resolution, capacity building, environmental tax, sustainable development, and taxation of development projects will also be discussed.
The agenda of a special Economic and Social Council (ECOSOC) Special Meeting on International Cooperation on Tax Matters, to be held on April 29 in New York, was also released.
The ECOSOC special meeting will focus on emerging issues of tax policy and administration related to digitalization of the economy, taxation and environmental protection, and taxation and inequality.
- Update of the United Nations Practical Manual on Transfer Pricing for Developing Countries (E/C.18/2019/CRP1)
- Chapter 3 of the Handbook on dispute avoidance and resolution (E/C.18/2019/CRP2)
- Chapter 5 of the Handbook on dispute avoidance and resolution (E/C.18/2019/CRP3)
- Environmental tax issues (E/C.18/2019/CRP4)
- Revised version of the Manual on the Negotiation of Tax Treaties between Developed and Developing Countries (E/C.18/2019/CRP5)
- Work on the tax treatment of ODA projects (E/C.18/2019/CRP6)
- Update of the UN Model Double Taxation Convention between Developed and Developing Countries – Permanent Establishment (E/C.18/2019/CRP8)
- Update of the UN Model Double Taxation Convention between Developed and Developing Countries -Taxation of Capital Gains (E/C.18/2019/CRP9)
- Update of the UN Model Double Taxation Convention between Developed and Developing Countries -Beneficial Ownership (E/C.18/2019/CRP10)
- Update of the Handbook on Selected Issues for Taxation of the Extractive Industries by Developing Countries (E/C.18/2019/CRP11)
- Work on taxation issues related to the digitization of the economy (E/C.18/2019/CRP12)
- Comments on E/C.18/2019/CRP.10 – Beneficial Ownership (E/C.18/2019/CRP.13)
- Secretariat Paper: The Interaction of Tax Trade and Investment Agreements (E/C.18/2019/CRP.14)
The UN Committee of Experts on International Cooperation in Tax Matters has released an additional paper in advance of its Eighteenth Session:
- Modification to Article 13 (Capital gains) of the UN Model (E/C.18/2019/CRP.9)