Transfer Pricing: OECD releases new Transfer Pricing Guidelines

The new 2022 edition of the OECD Transfer Pricing Guidelines consolidates into a single publication the changes to the 2017 edition of the Transfer Pricing Guidelines resulting from the below BEPS (base erosion and profit shifting) initiatives: 

• The report Revised Guidance on the Transactional Profit Split Method
• The report Guidance for Tax Administrations on the Application of the Approach to Hard-to-Value Intangibles
• The report Transfer Pricing Guidance on Financial Transactions

The revised guidance on the application of the transactional profit method retains the basic premise that the profit split method should be applied where it is found to be the most appropriate method to the case at hand, but it significantly expands the guidance available to help determine when that may be the case. It also contains more guidance on how to apply the method, as well as numerous examples.

The new guidance for tax administration on the application of the approach to hard-to-value intangibles (HTVI) is aimed at reaching a common understanding and practice among tax administrations on how to apply adjustments resulting from the application of this approach. This guidance should improve consistency and reduce the risk of economic double taxation by providing the principles that should underlie the application of the HTVI approach. The guidance also includes a number of examples to clarify the application of the HTVI approach in different scenarios and addresses the interaction between the HTVI approach and the access to the mutual agreement procedure. 

The new transfer pricing guidance on financial transactions describes the transfer pricing aspects of financial transactions. It also includes a number of examples to illustrate the principles to be applied. The guidance also addresses specific issues related to the pricing of financial transactions (e.g. treasury functions, intra-group loans, cash pooling, hedging, guarantees and captive insurance).

Finally, consistency changes have been made to the rest of the OECD Transfer Pricing Guidelines.

Read The revised Transfer Pricing Guidelines.