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OECD on Track to Deliver New Guidance on Intangibles

The OECD is expected to release widely anticipated deliverables on two transfer pricing items from the Base Erosion and Profit Shifting Action Plan – intangibles and documentation – sometime before the meeting of the G20 finance ministers and central bank governors in Cairns, Australia, on September

The Organization for Economic Cooperation and Development (OECD) is expected to release widely anticipated deliverables on two transfer pricing items from the Base Erosion and Profit Shifting Action Plan – intangibles and documentation – sometime before the meeting of the G20 finance ministers and central bank governors in Cairns, Australia, on September 20-21.

The OECD has stated its intent to provide a revised chapter V of its transfer pricing guidelines on documentation, and a revised chapter VI on intangibles.

The revisions to the OECD transfer pricing guidelines on documentation are expected to set a new global standard for transfer pricing documentation and to have a major impact on how multinational enterprises document their compliance with the applicable transfer prices rules. The revisions are expected to add for the first time new disclosure requirements regarding multinational enterprises’ entire global operations. The new requirements for country-by-country financial disclosure and the new master file disclosure of how a multinational enterprise conducts its global operations will add a level of transparency to multinational enterprises’ global operations that is not currently found in most documentation reports or available to tax auditors in many countries. Most countries are expected to adopt this new standard.

The revisions to the OECD transfer pricing guidelines on intangibles are a work in process, but will likely provide additional support to countries that take a broad view of the definition of intangibles and countries that utilize the discounted cash flow method to value intangibles. In addition, the OECD is expected to finalize important guidance on location-specific advantages, workforce in place, and the impact of “passive association” on the arm’s length charge for interest and in other situations. Although this release is not expected to finalize the guidance for determining the related party entitled to the returns for the ownership and development of intangibles, the draft guidance in the release is expected to have a significant impact on the conversation on those issues.

Deloitte is monitoring OECD transfer pricing developments closely, and will conduct webcasts on the new guidance in the Americas, Asia, and Europe soon after the deliverables are released. Please look for an announcement of the webcasts and a link to sign up. We will also send out a special edition of the Arm’s Length Standard to subscribers with our analysis of the new guidance and its implications for multinational enterprises soon after the release.

Carla van der Merwe
Associate Director
Tax: transfer Pricing
Email:
cavandermerwe@deloitte.co.za
Tel: +27 11 806 5230

Billy Joubert
Director
Tax: Transfer Pricing
Email:
bjoubert@deloitte.co.za
Tel: + 27 11 806 5352

 

 

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