The OECD’s Revised Discussion Draft contains several important changes. These were based on the comments received on the prior Discussion Draft. The majority of the document provides additional guidance on how to correctly allocate ‘return related to an intangible’ (also described as: ‘intangible related return’). The Revised Discussion Draft states that although contractual relationships between related parties will continue to serve as a starting point for any transfer pricing analysis, the location where material functions related to intangible assets are performed is also considered to be key. This focus on functional value creation is being formalised by the OECD through the concept of ‘important functions’, which consists of the crucial activities and decisions identified under the prior Discussion Draft. Download the full report for more detailed information and the observations PwC made.
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