THE OECD has released
a White Paper on Transfer Pricing documentation. This document is intended
to initiate an international discussion of ways in which compliance with
transfer pricing documentation requirements can be made simpler and more
straight-forward, while at the same time providing tax authorities with more
focused and useful information for consideration in connection with transfer
pricing risk assessment and transfer pricing audits.
Over the last 20 years, transfer pricing documentation requirements have rapidly
spread around the world. The proliferation of transfer pricing documentation
requirements, combined with a dramatic increase in the volume and complexity
of international intra-group trade and the heightened scrutiny of transfer
pricing issues by tax authorities, makes transfer pricing documentation one
of the top tax compliance issues on the agendas of both tax authorities and
businesses.
The recently issued OECD Action Plan on Base Erosion and Profit Shifting calls
for the development of transfer pricing documentation rules that will enhance
transparency for tax administration, taking into account the compliance costs
for business. The Action Plan indicates that “the rules to be developed will
include a requirement that MNE’s provide all relevant governments with needed
information on their global allocation of the income, economic activity and
taxes paid among countries, according to a common template.” The Action Plan
statements are consistent with the 18 June Communique of the G8 Lough Erne
Summit.
The Committee on Fiscal Affairs believes that it is essential to obtain input
from the business community and from other interested non-governmental parties
on these topics. Accordingly, this White Paper is issued as a first step in
soliciting public comments.
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