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OECD Issues Discussion Draft On BEPS Action 8 And CCAs

Wednesday 13th May 2015

The OECD has recently issued a discussion draft on BEPS Action 8 and proposes an update to the guidance on cost contribution arrangements [CCA’s] found in Chapter VIII of the Transfer Pricing Guidelines.

Action 8 of the BEPS Action Plan covers the transfer pricing of intangibles and requires the development of rules to prevent BEPS by moving intangibles among group members. A first instalment of work in response to this Action is found in the report, Guidance on Transfer Pricing Aspects of Intangibles (2014), which provides modifications to, mainly, Chapter VI of the Transfer Pricing Guidelines. This discussion draft responds to the requirement under Action 8 to update the guidance on CCAs found in Chapter VIII of the Transfer Pricing Guidelines and provides proposed text for an updated chapter.

CCAs can often be used for the joint development, enhancement, maintenance, protection or exploitation of intangibles and a key objective in revising the guidance is to align the transfer pricing of intangibles under CCAs with the general guidance on the transfer pricing of intangibles found in the revised Chapter VI. In particular, the clarification in the guidance to require contributions to be measured at value rather than at cost helps to ensure that outcomes for participants under a CCA should not differ significantly from the outcomes of transfers or development of intangibles for parties outside a CCA.

The guidance in the discussion draft also takes into account draft guidance on Chapter I of the Transfer Pricing Guidelines released for public comments on 19th December 2014 and in particular, the draft guidance on risk in Chapter I which is relevant to a CCA and which depends on the bearing of risks by all participants.

Finalising the guidance in the discussion draft will take into account any conforming amendments required arising from changes to other parts of the Transfer Pricing Guidelines.

The views and proposals included in the discussion draft do not represent consensus views of the Committee on Fiscal Affairs or its subsidiary bodies but are intended to provide stakeholders with substantive proposals for analysis and comment.

Public comments have been invited on the discussion draft, including on whether the goal of consistency with other parts of the Guidelines is appropriate, and if so, whether the draft achieves such consistency, to be submitted by 29th May 2015.

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