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BEPS Action 10: Proposed modifications to transfer pricing guidelines relating to low value-adding intragroup services
P202/2014 – 14 November 2014
On 3 November 2014, the OECD, as part of its work on the Action Plan to address Base Erosion and Profit Shifting (BEPS), released a discussion draft in relation to Action 10 that proposes a simplified transfer pricing approach for low value-adding intragroup services, which ultimately would lead to revisions in Chapter VII of the OECD’s transfer pricing guidelines. The aim is to reduce base erosion through excessive management fees and head office expenses, particularly in developing countries. The simplified approach, which a group may elect to adopt, recognizes that the arm’s length price is closely related to costs and allocates the costs of providing each category of such services to the group companies that benefit from using the services using consistent group-wide allocation keys with an associated consistent small mark-up.
As with other discussion drafts on BEPS actions, the proposals do not represent a consensus view from the G20/OECD countries involved, but are designed to provide substantive proposals for public comment (comments are invited by 14 January 2015). Learn more.