BEPS transfer pricing update - risk, capital & special measures

BEPS transfer pricing update - risk, capital & sp...

On 19 December 2014, the OECD released its final 2014 document under its Base Erosion and Profit Shifting (“BEPS”) Plan.

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Background

On 19 December 2014, the OECD released its final 2014 document under its Base  Erosion and Profit Shifting (“BEPS”) Plan. The draft proposes changes to the widely used OECD Transfer Pricing Guidelines in relation to risk and capital, re-characterisation of certain transactions and special measures for hard to value intangibles. This draft is the outcome of the OECD’s work from three BEPS Actions (8, 9, and 10) to assure that transfer pricing outcomes are in line with value creation.
 
We briefly outline below the structure and content of the BEPS discussion draft.  Commentary and further details on this important draft will be published in due course.

Risk, re-characterisation and special measures

The draft has been divided into two parts:
 
Part I - proposes revisions to Chapter I of the OECD Transfer Pricing Guidelines to emphasise importance of accurately delineating the actual transactions, and to include guidance on relevance and allocation of risk, determining the economically relevant characteristics of controlled transactions, and on re-characterisation or non-recognition of controlled transactions.
 
Part II - sets out options for special measures with regard to intangible assets, risk and over-capitalisation.
 
Please click here for a copy of the OECD discussion draft (PDF, 315KB).

Issues to be considered

Transfer pricing touches on many of the BEPS Plan’s Action Items. This latest draft covers all transfer pricing-specific Action Items (8 through 10) and touches on several related discussion drafts already released by the OECD in the BEPS Plan.  Businesses with operations in Ireland and abroad will need to understand how future rules are drafted and adopted into law in Ireland as well as in foreign countries.

How we can help

Our transfer pricing team will help you frame and understand the key value drivers of your business in a manner that supports a robust approach to transfer pricing. We will evaluate where profits from your international business will be taxed and on what basis. With a broad range of experience from Ireland, the US, Canada, Asia, South America and Europe, our team is well placed to advise you in how to meet these new requirements so you can remain focused on managing your business.

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