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BEPS Action 10: Discussion Draft on the Use of Profit Splits in the Context of Global Value Chains

Tax Analysis:February 4, 2015/China

The OECD on 16 December issued a non-consensus discussion draft on the use of profit splits in the context of global value chains in connection with Action 10 of the Action Plan on Base Erosion and Profit Shifting (BEPS). (Tax Analysis:February 4, 2015/China)

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The OECD on 16 December issued a non-consensus discussion draft on the use of profit splits in the context of global value chains in connection with Action 10 of the Action Plan on Base Erosion and Profit Shifting (BEPS) to develop “rules to prevent BEPS by engaging in transactions which would not, or would only very rarely, occur between third parties. This will involve adopting transfer pricing rules or special measures to . . . (ii) clarify the application of transfer pricing methods, in particular profit splits, in the context of global value chains.”
The discussion draft does not contain specific proposed modifications to the OECD’s transfer pricing guidelines, but rather, presents eight scenarios whereby the profit split method could potentially be applicable, and solicits comments from interested parties to elaborate on these scenarios regarding the relative reliability of such methods.

 

>> Click for Japanese [BEPS 行動計画10:グローバルバリューチェーンにおける利益分割法の使用に関するディスカッションドラフト]

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