A new edition of 612 pages of the OECD Transfer Pricing Guidelines was published on July 10, 2017. The 2017 Transfer Pricing Guidelines provide new guidance on the application of the arm’s length principle, i.e. the international consensus on the valuation, for corporate tax purposes, of cross-border transactions between associated enterprises. The 2017 Transfer Pricing Guidelines replace the previous Transfer Pricing Guidelines issued in 2010.
The 2017 Transfer Pricing Guidelines incorporate the substantial revisions made to reflect the clarifications and revisions agreed in the 2015 OECD BEPS Reports on Actions 8-10 Aligning Transfer Pricing Outcomes with Value Creation and on BEPS Action 13 Transfer Pricing Documentation and Country-by-Country Reporting. It also includes the revised guidance on safe harbors, approved in 2013, which recognizes that properly designed safe harbors can help to relieve some compliance burdens and provide taxpayers with greater certainty.
In our memorandum, we discuss four main areas where the 2017 Transfer Pricing Guidelines have been revised as compared to the 2010 Transfer Pricing Guidelines:
- Significant revisions with new rules to combat BEPS by moving intangibles among group members, covering BEPS Actions 8, 9, 10 and 13.
- The revisions to Chapter IX to ensure the guidance on business restructurings conforms with the revisions introduced by the 2015 reports on BEPS Actions 8‑10 and 13.
- The revised guidance on safe harbors in Chapter IV.
- Consistency changes to align the rest of the OECD Transfer Pricing Guidelines to produce one consolidated and new edition.
- There is no new substantive content in the published version of the 2017 Transfer Pricing Guidelines beyond what was already announced in the OECD BEPS Actions 8-10 and Action 13 final reports.
- Formal publication of these 2017 Transfer Pricing Guidelines may enhance the legal standing of the guidelines in some jurisdictions (this is already the case in the Netherlands), depending on how individual countries transpose the OECD Transfer Pricing Guidelines into national law.
- The 2017 Transfer Pricing Guidelines do not incorporate forthcoming OECD guideline changes to, a.o.:
a. the profit split guidance contained in Chapter II. A revised discussion draft on this topic was released on June 22, 2017;
b. related-party financial transactions, where the OECD announced that it would publish important new guidance for multinationals on intercompany loans, cash pooling, and reinsurance later this year or early 2018.