The Organization for Economic Cooperation and Development (OECD)
has released the first components of its comprehensive plan for
creating an agreed set of international rules for fighting base
erosion and profit shifting (BEPS) and ending opportunities for
double non-taxation. The four model legal instruments and three
reports are the first seven deliverables of the OECD's
15-action plan for fighting BEPS. In particular, two deliverables
relate specifically to transfer pricing as follows:
Action 8 — guidance on transfer pricing aspects of
Action 13 — guidance on transfer pricing documentation,
including a country-by-country reporting template.
Action 8: Intangibles
The deliverable in respect of action 8 sees revisions to the
OECD Transfer Pricing Guidelines to align transfer pricing outcomes
with value creation in the area of intangibles. The changes clarify
the definition of intangibles and provide guidance for related
parties; including transactions involving intangibles and the
transfer pricing treatment of local market features and corporate
synergies. Some transfer pricing issues relating to intangibles are
closely related to other issues that are to be addressed during
2015, most notably in relation to the allocation of risk among
multinational enterprise group members and re-characterisation of
Action 13: Country-by-Country Reporting
In BEPS Action 13, the OECD has delivered a six-column
country-by-country reporting template that asks multinationals to
disclose to tax authorities their turnover, profits, accrued taxes,
paid taxes, employees and assets, country-by-country, in all the
countries where they operate.
These new reporting provisions and the transparency they will
encourage, will contribute to the objective of understanding,
controlling and tackling BEPS behaviours. Effective implementation
of the new reporting standards and reporting rules will be
essential. Additional work will be undertaken to identify the most
appropriate means of filing the required information with and
disseminating it to tax administrations. The modalities of
implementing the country-by-country reporting template will be
decided by January 2015. Meanwhile, the OECD has agreed to consider
revising the template based on members' experience by
The OECD will present the seven deliverables to the G-20 finance
ministers meeting September 20-21 in Cairns, Australia and then to
G-20 leaders meeting November 15-16 in Brisbane, Australia. Stay
tuned for more to come on this later.
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