OECD: Discussion draft, BEPS Action 8 (hard-to-value intangibles)

OECD: BEPS discussion draft, Action 8

The Organisation for Economic Co-operation and Development (OECD) today released a discussion draft concerning work in relation to Action 8 under the base erosion and profit shifting (BEPS) project with respect to hard-to-value intangibles.


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Today’s discussion draft [PDF 62 KB] is being released under Action 8 (Assure that transfer pricing outcomes are in line with value creation: Intangibles) and identifies that work needs to be undertaken to develop “transfer pricing rules or special measures for transfer of hard-to-value intangibles.”

The discussion draft sets out an approach for hard-to-value intangibles and proposes revisions to the guidance in Section D.3 of the BEPS report, Guidance on Transfer Pricing Aspects of Intangibles (2014).

Arm’s length pricing

As further explained in today’s related OECD release—

  • The revised guidance explains the difficulties faced by tax administrations in verifying the arm’s length basis on which pricing was determined by taxpayers for transactions involving a specific category of intangibles.
  • The discussion draft proposes an approach based on the determination of the arm’s length pricing arrangements, including any contingent pricing arrangements that would have been made between independent entities at the time of the transaction. This approach is applied when specific conditions are met and it is intended to protect tax administrations against the negative effects of information asymmetry.

Comments are due by 18 June 2015. A public consultation is scheduled for 6-7 July 2015

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