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KPMG report: OECD discussion draft, transfer pricing of financial transactions

OECD discussion draft, transfer pricing

The Organisation for Economic Cooperation and Development (OECD) in early July 2018 released a discussion draft on the transfer pricing aspects of financial transactions.

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KPMG’s Global Transfer Pricing Services practice provided comments in response to the discussion draft. Read the KPMG comments [PDF 250 KB] and an executive summary [PDF 46 KB] of these comments.

Background

The OECD’s discussion draft on financial transactions [PDF 1.1 MB] concerns a follow-up to base erosion and profit shifting (BEPS) Actions 8-10 (Assure that transfer pricing outcomes are in line with value creation). 

The 2015 report on BEPS Actions 8-10 mandated follow-up work on the transfer pricing aspects of financial transactions. Under that mandate, the discussion draft released is intended to clarify the application of the principles included in the 2017 edition of the OECD Transfer Pricing Guidelines—in particular, the accurate delineation analysis under Chapter I to financial transactions. Also addressed are specific issues related to the pricing of financial transactions such as treasury function, intra-group loans, cash pooling, hedging, guarantees, and captive insurance.

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