UK and International Tax news

OECD Approves Incorporation Of BEPS Amendments Into TP Guidelines

Monday 4th July 2016

The OECD Council has recently approved the amendments to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, as set out in the 2015 BEPS Report on Actions 8-10  “Aligning Transfer Pricing Outcomes with Value Creation”, and the 2015 BEPS Report on Action 13 “Transfer Pricing Documentation and Country by Country Reporting.

The amendments approved by the Council translate these BEPS transfer pricing measures into the TP Guidelines, as well as into the Recommendation of the Council on the Determination of Transfer Pricing Between Associated Enterprises [C(95)126/FINAL], which now contains a reference in the Preamble to these BEPS Reports.

Given the way in which the TP Guidelines are integrated into the domestic law of certain countries, including by direct reference to the Guidelines themselves, this update process further clarifies the status of the BEPS changes to the TP Guidelines.

The specific changes introduced in the TP Guidelines by these Reports include the current provisions of Chapter I – Section D and Chapters V to VIII  being deleted in their entirety and replaced by new guidance, and paragraphs are added to Chapter II, immediately following paragraph 2.16 and a new paragraph is added after paragraph 2.9.

Further work is being undertaken to make conforming amendments to the remainder of the TP Guidelines, in particular to Chapter IX “Transfer Pricing Aspects of Business Restructurings.” This work is well advanced and it is expected that Working Party No. 6 of the Committee on Fiscal Affairs will soon invite interested parties to review the conforming changes to Chapter IX to establish that real or perceived inconsistencies with the revised parts of the Guidelines have been appropriately addressed, and duplication appropriately removed.

The conforming changes are expected to be approved later in 2016. Until then, it is stipulated that the provisions of the TP Guidelines should be interpreted to be consistent with those provisions of the TP Guidelines which have been amended by the 2015 BEPS Report on Actions 8-10 and 2015 BEPS Report on Action 13 and, in case of perceived inconsistencies, the modified provisions prevail.

If you would like further information on the above, please contact Keith Rushen on 0207 486 2378.

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