On 16 September 2014, the Organisation for Economic Cooperation and Development (OECD) finalized its guidance in relation to transfer pricing documentation and country-by-country (CbC) reporting. The final report is broadly consistent with the Discussion Draft released by the OECD on 30 January 2014, although it has pared back some proposals in response to concerns of the business community and clarified a number of questions raised by the Discussion Draft.
The guidance from this report will replace the transfer pricing documentation guidance contained in Chapter V of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines). In summary, this guidance seeks to provide a coherent and consistent framework under which multinational enterprises (MNEs) should prepare global transfer pricing documentation, while simultaneously improving the ability of tax authorities to make better informed risk assessments and to conduct better targeted transfer pricing audits. Some of the details around implementation mechanisms, including timing, will be developed further over the next few months and for many OECD countries there may be a need to implement this new approach to transfer pricing documentation through changes to domestic law before this fully comes into effect. However, it is clear that there is a strong commitment to implement and this will represent a significant shift to the way in which MNEs currently prepare and renew transfer pricing documentation. In fact, on Saturday, the UK became the first country to formally commit to implementing the CbC report.
More details can be found here.