11 February 2020
The Organisation for Economic Cooperation and Development (OECD) today released a report providing transfer pricing guidance on financial transactions.
The OECD report—Transfer Pricing Guidance on Financial Transactions: Inclusive Framework on BEPS: Actions 4, 8-10—is the first time that the OECD Transfer Pricing Guidelines include guidance on the transfer pricing aspects of financial transactions. It is anticipated that today’s guidance will “contribute to consistency in the interpretation of the arm’s length principle” and will help avoid future transfer pricing disputes as well as double taxation issues.
As further explained by the OECD in today’s release, the OECD/G20 in October 2015 published reports on base erosion and profit shifting (BEPS) Action 4 (Limiting base erosion involving interest deductions and other financial payments) and BEPS Actions 8-10 (Aligning transfer pricing outcomes with value creation). Both of these reports required follow-up work on the transfer pricing aspects of financial transactions.
The guidance in today’s report describes the transfer pricing aspects of financial transactions, and in particular: