On 23 May 2017, the OECD released (under the impetus of the Final Report on BEPS Actions 8-10) a discussion draft which aims to giving guidance on the implementation of the approach to use ex post results as presumptive evidence about the ex ante pricing of transfers of hard-to-value intangibles (“HTVI”). The approach is described in Chapter VI of the Transfer Pricing Guidelines as revised. The development of such guidance was mandated by the BEPS Action Plan, and more specifically the Final Report on Actions 8-10.
In essence, the guidance aims at providing an answer to the problem of information asymmetry that tax authorities may be confronted with (i.e., the fact that extensive information may have been available to the taxpayer but not to the tax administration beyond what the taxpayer may present) and describes the conditions that would allow for a consideration of ex post outcomes as presumptive evidence. The discussion draft aims at doing this through a number of practical examples that illustrate the practical implementation of a transfer pricing adjustment arising from the HTVI guidance as well as the interaction between the approach to HTVI and the mutual agreement procedure under an applicable treaty.
The OECD invites interested parties to send comments on this discussion draft by 30 June 2017. Comments received will be made publicly available.
For more insights on transfer pricing of hard-to-value intangibles, and to understand the implications for your organisation please contact Jonas Van de Gucht.