Multinational enterprises (MNEs) will face materially increased compliance burdens as a result of the hotly debated proposals to report to tax administrations, on a country-by-country basis, extensive details of their income, taxes, and business activities. Further, extensive changes to the current requirements for transfer pricing documentation reporting will also add to this burden. These are the broad consequences of the proposals made by the Organisation for Economic Cooperation and Development (OECD) in a discussion draft released on 30 January 2014.
The guidance from this discussion draft is intended to replace the transfer pricing documentation guidance contained in Chapter V of the OECD’s currentTransfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines), which was adopted in 1995. Unlike the current version of Chapter V, the discussion draft requires a mandated list of documents to be included in a transfer pricing documentation package. The OECD will be giving further consideration to whether information relevant to other aspects of the Action Plan on Base Erosion and Profit Shifting (BEPS Action Plan) should also be included.
The discussion draft also requests specific comments on a number of issues. A list of the OECD’s questions is included below. Public comments on the discussion draft are requested according to a very tight timetable and are due by 23 February 2014.