OECD Public Consultation on BEPS Actions 8 through 10 reveals planned revisions to transfer pricing drafts


During the July 6-7, 2015 public consultation on BEPS Actions 8 through 10, the OECD Working Party 6 announced planned revisions to its proposed changes to the Transfer Pricing Guidelines, including its December 2015 papers on Risk, Recharacterisation and Special Measures and Use of Profit Split Methods and its 2014 draft on Intangibles. The OECD also received feedback from speakers who had submitted written comments to the drafts on Cost Contribution Arrangements and Hard to Value Intangibles (proposed changes to Chapter VI of the Transfer Pricing Guidelines on Intangibles). In providing the updated status of the various transfer pricing workstreams, the OECD also confirmed the delivery timetable for the transfer pricing work.

The extent of potential changes to the Transfer Pricing Guidelines has been scaled back and appears to be more aligned with the arm’s-length principle of the Guidelines. This follows previous public consultations and the hundreds of pages of comments and feedback received from industry and representatives. Further, this scaling back may be attributable to an effort to reach consensus among the various taxing authorities participating in the Working Party 6.

The OECD further confirmed its determination to broadly deliver the overall transfer pricing package by the September deadline (in advance of the G-20 Finance Ministers meeting in October). The package includes items under Actions 8-10 on Intangibles, Low Value-Adding Services, and Commodities, together with the final package under Action 13, Documentation and Country-by-Country Reporting (CbCR). Further, the OECD noted that BEPS work in some areas will be deferred to 2016 and 2017, including financial transactions, attribution of profits to permanent establishments, use of profit split methods, and implementation of hard-to-value intangibles.

Also, the OECD secretariat shared that the UN and the IMF have given a mandate to the OECD to develop a toolkit to assist “lowest income countries” in implementing the outcome of the BEPS project. As an example, the actual addressing of solutions in case of lack of comparables was mentioned.

The OECD’s planned revisions and confirmed timeline will have a significant impact as companies consider changes to transfer pricing policies as well as the impact of the new documentation and CbCR requirements.

For more information in this respect, please read PwC’s Tax Insights.