MULTI-COUNTRY ANALYSIS OF EXISTING TRANSFER PRICING SIMPLIFICATION MEASURES – 2012 UPDATE
The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“TPG”) provide internationally accepted guidance on the application of the arm‟s length principle set out in Article 9 of the OECD and UN Model Tax Conventions. While the OECD works on an ongoing basis to monitor and revise the TPG in order to continually improve the transfer pricing guidance available to taxpayers and tax administrations, it also recognises the growing need to address practical and administrative aspects of implementation of the TPG.
The OECD Committee on Fiscal Affairs (“CFA”) launched in 2010 a project on the administrative aspects of transfer pricing including a review of techniques that may be implemented by countries to optimise the use of taxpayers‟ and tax administrations‟ resources. A survey was conducted as part of this project. A document containing the main findings from the survey was released in June 2011 based on the responses provided by 33 OECD and non-OECD countries. The OECD subsequently invited more countries to participate in this survey. Eight countries responded to this invitation and a total of 41 OECD and non-OECD countries provided detailed responses concerning measures currently existing in their domestic law to simplify the application of their transfer pricing rules. This document presents updated analysis of existing transfer pricing simplification measures as of 1 January 2012.
The survey described in this document focussed specifically on simplification measures countries have adopted as part of their transfer pricing regimes. These include not only safe harbours but also measures such as less stringent documentation requirements, alleviated penalties, streamlined procedures, etc. This document contains both an analysis of the key findings from the survey and a compilation of the country responses.