PwC comments on the Discussion Draft on Transfer Pricing Comparability Data and Developing Countries


PwC has provided the OECD with its comments on the ‘discussion draft on transfer pricing comparability data and developing countries’ on 11 April 2014.

PwC agrees with the OECD in that comparability is at the heart of transfer pricing, and that the application of the arm’s length principle often relies on a comparison of the prices charged in controlled transactions with the prices charged in similar transactions between independent enterprises. We also appreciate that tax authorities in developing countries have expressed concerns about the availability and quality of information regarding transactions between unrelated parties for purposes of applying the arm’s length principle.

PwC supports the OECD’s efforts to make administration of the arm’s length principle easier in order to maintain the international consensus. However, we are concerned that some of the suggestions in the Discussion Draft, combined with concepts from the OECD’s Action Plan on Base Erosion and Profit Shifting (“the BEPS Action Plan”) released on July 19, 2013, and Revised Discussion Draft on Transfer Pricing Aspects of Intangibles (“the Revised Intangibles Discussion Draft”) released on July 30, 2013, may create so many exceptions to the arm’s length principle that it ultimately loses some of its vitality.

Further, PwC supports the use of safe harbors to the extent such safe harbors are transparent, based upon publicly-available information, simple to apply, and elective by the taxpayer.

Our specific comments on the OECD’s suggested approaches can be found here: PwC Comments on Discussion Draft on Transfer Pricing Comparability Data and Developing Countries.