Arms length standard: Special edition
The Organisation for Economic Cooperation and Development on September 16 released guidance on seven of the 15 items in the Base Erosion and Profit Shifting Action Plan issued July 2013.The three articles in this special issue of the Arm’s Length Standard provide in-depth analysis of the changes.
OECD Chapter 1 Release: Important Guidance on Location-Specific Advantages and Passive Association
The OECD’s revised guidance in Chapter VI of the transfer pricing guidelines defines intangibles as assets other than physical or financial assets that are capable of being owned or controlled by a single enterprise. Under this definition, location-specific characteristics and workforce in place are not considered intangibles, because they are not capable of being owned or controlled; rather, they should be considered comparability factors to be taken into account in a transfer pricing analysis. The revisions to Chapter I provide important guidance on location-specific characteristics, workforce-in-place, and synergy benefits as comparability factors
OECD Release on Transfer Pricing Documentation: The New Global Standard
The OECD’s final revisions to Chapter V of the transfer pricing guidelines materially reduce the documentation burden on businesses contemplated in the January 30, 2014, discussion draft on transfer pricing documentation and CbC reporting, and clarify many of the issues that had concerned businesses. However, the full impact of the additional requirements the new Chapter V imposes will not be understood until January 2015, when the OECD releases additional guidance on implementation issues, including timing.
OECD Release on Intangibles: Many Issues Unanswered
The OECD revisions to Chapter VI of the transfer pricing guidelines, Special Considerations for Intangibles, as part of the release of base erosion and profit shifting (BEPS) deliverables, are a work in progress, as several important sections remain in draft form and will only be finalised as part of the 2015 BEPS deliverables. However, the release provides important guidance in the many areas that are final, and for those that are not, it provides insight into the likely direction of future guidance