On 10 July 2017, the Organisation for Economic Co-operation and Development (OECD) released the latest edition of its Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“the Manual” or “OECD TPG”).
The Manual was originally published by the OECD Council in 1995 and was subsequently updated in 1996 and 1997. Prior to the release of the 2017 edition, the last revision to the Manual was made in 2010.
Some of the changes reflected in the 2017 edition of the Manual aimed at providing clearer guidance on the application of the arm’s length principle include:
- revisions to guidance on the application of the arm’s length principle (Section D of Chapter I);
- additions to Chapter II of the Manual to accommodate commodity transactions;
- revised guidance on safe harbour provisions as approved in 2013 (Chapter IV);
- revised guidance on documentation (Chapter V) to include three-tiered approach to documentation (i.e. master file, local file and country-by-country reporting);
- wholesale revision to the guidance on intangibles (Chapter VI);
- inclusion of guidance on low value-adding intra-group services (LVAS) to Chapter VII;
- revisions to Chapter VIII on cost contribution arrangements (CCAs); and
- changes to ensure general consistency to the guidelines.
Read our alert for more insights. Also provided below is a link to the OECD Guidelines.
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