The highly anticipated new edition of the OECD´s Transfer Pricing Guidelines was issued on 10 July 2017. It mainly reflects a consolidation of changes resulting from the BEPS project.
Probably the greatest change in the 2017 edition is in the chapter on the arm´s length principle, in part explaining the identification of commercial or financial relations. Furthermore, this chapter now explains effects on comparability caused by location savings, local market features, having an assembled workforce, and MNE group synergies.
The chapter on Transfer Pricing Documentation is brand new in the 2017 edition. It explains three-tiered approach to documentation, i.e., master file, local file and Country-by-Country Report.
The chapter on Intangibles is brand new as well. It covers ownership of intangibles and also transactions involving development, enhancement, maintenance, protection, and exploitation of intangibles.
The 2017 edition also contains a new subchapter on Safe Harbours. It replaces the previous negative view on this matter and provides recommendations for the use of safe harbors.
Other changes in the 2017 edition are related to low value-added intragroup services, cost contribution arrangements and consistency changes that were needed to produce the new edition of the Guidelines.
This article was originally issued in the GGI International taxation newsletter.