The OECD yesterday released two papers – one on the Revised Discussion Draft on Intangibles and the other on Transfer Pricing Documentation.
The functional value creation is at the forefront of the Revised Discussion Draft. Where transfer pricing may traditionally have been seen as the pricing on a transactional basis, it is clear that a thorough analysis of the corporate value chain and substance will form the starting point of a transfer pricing exercise. This is the focus of the Discussion Draft on Intangibles.
The OECD’s White Paper on Transfer Pricing Documentation fits in neatly with its other ongoing areas of work, including the BEPS Action Plan, the Discussion Draft on Intangibles and the Handbook on Risk Assessment in Transfer Pricing. The OECD sees potential for standardisation to reduce compliance costs for taxpayers, but equally puts emphasis on the role that transfer pricing documentation can play for enhanced transparency and improved risk assessment. In this sense, the White Paper takes stock of existing approaches to harmonise transfer pricing documentation, but goes considerably further by proposing a Coordinated Approach to Documentation based on a two-tier structure. Attached below are copies of the white papers for your use.