THE Working Parties of the OECD Committee on Fiscal Affairs has released several discussion draft papers on safe harbours, timing in TP issues and TP aspects of intangibles.

Such a project started with a survey of the transfer pricing simplification measures in existence in OECD and non-OECD countries and led WP6 to review the current guidance on safe harbours in Chapter IV of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“TPG”).

The current guidance in the TPG has a somewhat negative tone regarding transfer pricing safe harbours. This negative tone does not accurately reflect the practice of OECD member countries, a number of which have adopted transfer pricing safe harbour provisions. Also, the current guidance is 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 discussion draft includes proposed revisions of the section on safe harbours in Chapter IV of the TPG and associated sample memoranda of understanding for competent authorities to establish bilateral safe harbours.

This document, prepared by OECD Working Party No. 6, is an interim draft. It contains: (i) a proposed revision of the provisions of Chapter VI of the OECD Transfer Pricing Guidelines; and (ii) a proposed revision of the Annex to Chapter VI containing examples illustrating the application of the provisions of the revised text of Chapter VI.

Because this is an interim draft it should be recognised that it is not necessarily a consensus document and that the Committee on Fiscal Affairs has not yet considered the draft. One or another country may not be in full agreement with one or more of its provisions. Nevertheless, OECD Working Party No. 6 believes that it will be extremely helpful to its ongoing work on the intangibles project to have detailed business input with regard to the various provisions of this draft.