KPMG Global Insights reports on new OECD documents offering transfer pricing guidance.
These alerts link to and cover the new OECD guidance, which relates to the transfer pricing aspects of financial transactions, the application of the transactional profit-split method, as well as a common approach for tax administrations to take when dealing with hard-to-value intangibles.
Transfer pricing & financial transactions—BEPS discussion draft
KPMG Global Insights reports on a new OECD discussion draft that focuses on the transfer pricing aspects of financial transactions. This report clarifies several principles from the 2017 edition of the OECD Transfer Pricing Guidelines and discusses economically relevant characteristics that should be considered when analyzing the terms and conditions of financial transactions. In addition, the report addresses specific issues related to the pricing of financial transactions such as treasury functions, intra-group loans, cash pooling, hedging, guarantees, and captive insurance. This discussion draft is a follow-up from the 2015 BEPS Actions 8-10 report (Assure that transfer pricing outcomes are in line with value creation).
See the KPMG Insights TaxNewsFlash: "OECD: BEPS discussion draft, transfer pricing aspects of financial transactions".
Applying the transactional profit-split method—Revised guidance
The OECD has released revised guidance on the "profit split method", developed under BEPS Action 10. According to KPMG Global Insights, the revised guidance expands on when it is appropriate to use the profit split method, how to apply the method, and also includes several examples. This guidance will be formally incorporated into the OECD Transfer Pricing Guidelines.
See the KPMG Insights TaxNewsFlash: "OECD: Guidance on hard-to-value intangibles, transactional profit split method".
Applying the "hard-to-value intangibles" approach— Guidance for tax administrations
Finally, KPMG Global Insights describes (and links to) new OECD guidance for tax administrations that outlines how to apply the OECD's approach to hard-to-value intangibles. This guidance is intended to improve consistency and reduce the risk of economic double taxation across tax administrations. The new guidance presents the underlying principles of the hard-to-value intangibles approach, provides a number of examples and addresses the interaction between this approach and the access to the mutual agreement procedure under the applicable treaty.
The guidance has been incorporated into the OECD Transfer Pricing Guidelines.
See the KPMG Insights TaxNewsFlash: "OECD: Guidance on hard-to-value intangibles, transactional profit split method ".
For more information, contact your KPMG adviser.
Information is current to July 10, 2018. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500.