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OECD okays revision of safe harbours provisions in TP Guidelines
By TII News Service
May 22, 2013 , Paris |
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THE OECD
Council has approved the revision of Section E on safe harbours in Chapter
IV of the Transfer Pricing Guidelines for Multinational Enterprises and
Tax Administrations. New guidance on safe harbours provides opportunities
for countries to relieve some compliance burdens and to provide greater
certainty for cases involving smaller taxpayers or less complex transactions.
With that, it provides a basis for countries, especially developing countries,
to design a transfer pricing compliance environment that makes optimal
use of the limited resources available.
The previous guidance in the TPG had a somewhat negative tone regarding transfer
pricing safe harbours. This negative tone did not accurately reflect the practice
of OECD Member countries, a number of which have adopted transfer pricing safe
harbour provisions. Also, the previous guidance was largely silent with regard
to the possibility of a bilateral agreement establishing a safe harbour, even
though some countries have favourable experience with such bilateral agreements.
The OECD developed a draft proposed revision of the guidance which recognises
that properly designed safe harbours can help to relieve some compliance burdens
and provide taxpayers with greater certainty. It encourages, under the right
circumstances, the use of bilateral or multilateral safe harbours as they may
provide a significant relief from compliance burdens without creating problems
of double taxation or double non-taxation. To facilitate negotiations between
tax administrations, it provides sample memoranda of understanding for
competent authorities to establish bilateral safe harbours for certain classes
of transfer pricing cases.
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