Post by Sapphire Capital on Sept 25, 2008 4:44:44 GMT 4
OECD starts consultation on transfer pricing issues and restructurings
Source: Joanna Faith ITR
The OECD Committee on Fiscal Affairs has released for public comments a discussion draft on the transfer pricing aspects of business restructurings.
The paper follows a surge in restructurings by multinationals and results from a January 2005 OECD roundtable which found that there were insufficient guidelines under both the OECD transfer pricing guidelines and the Model Tax Convention.
The organisation says the issues primarily involve the application of transfer pricing rules upon and/or after the conversion, the determination of the existence of, and attribution of profits to permanent establishments, and the recognition or non-recognition of transactions. It says the absence of a common understanding on how these issues should be treated may lead to uncertainty for business and governments as well as possible double taxation or double non-taxation.
"Some countries have started issuing regulations or guidance on these issues," Caroline Silberztein, the head of the transfer pricing unit in the OECD Centre for Tax Policy and Administration. "It is therefore important for the OECD to come out with good guidance in a reasonable time frame. This is a unique opportunity for business to contribute to the shaping of the international consensus on how business restructurings should be dealt with in relation to transfer pricing," she added.
The discussion draft, created by a joint working group, is composed of four issue notes. The first provides general guidance on the allocation of risks. The second note discusses the application of the arm's length principle and the transfer pricing guidelines to the restructuring. The third examines the application of the arm's length principle and the transfer pricing guidelines to post-restructuring arrangements. And the fourth discusses exceptional circumstances where a tax administration may consider not recognising a transaction or structure adopted by a taxpayer.
"The consultation process is key," Silberztein, who was a panellist at International Tax Review's Global Transfer Pricing Forum, last week, said. "Input from business commentators is essential to ensure that our guidance is realistic in practice and well balanced, and that it takes account of the commercial realities and of the difficulties encountered by multinational enterprises."
The deadline for comments is February 19 2009.
Source: Joanna Faith ITR
The OECD Committee on Fiscal Affairs has released for public comments a discussion draft on the transfer pricing aspects of business restructurings.
The paper follows a surge in restructurings by multinationals and results from a January 2005 OECD roundtable which found that there were insufficient guidelines under both the OECD transfer pricing guidelines and the Model Tax Convention.
The organisation says the issues primarily involve the application of transfer pricing rules upon and/or after the conversion, the determination of the existence of, and attribution of profits to permanent establishments, and the recognition or non-recognition of transactions. It says the absence of a common understanding on how these issues should be treated may lead to uncertainty for business and governments as well as possible double taxation or double non-taxation.
"Some countries have started issuing regulations or guidance on these issues," Caroline Silberztein, the head of the transfer pricing unit in the OECD Centre for Tax Policy and Administration. "It is therefore important for the OECD to come out with good guidance in a reasonable time frame. This is a unique opportunity for business to contribute to the shaping of the international consensus on how business restructurings should be dealt with in relation to transfer pricing," she added.
The discussion draft, created by a joint working group, is composed of four issue notes. The first provides general guidance on the allocation of risks. The second note discusses the application of the arm's length principle and the transfer pricing guidelines to the restructuring. The third examines the application of the arm's length principle and the transfer pricing guidelines to post-restructuring arrangements. And the fourth discusses exceptional circumstances where a tax administration may consider not recognising a transaction or structure adopted by a taxpayer.
"The consultation process is key," Silberztein, who was a panellist at International Tax Review's Global Transfer Pricing Forum, last week, said. "Input from business commentators is essential to ensure that our guidance is realistic in practice and well balanced, and that it takes account of the commercial realities and of the difficulties encountered by multinational enterprises."
The deadline for comments is February 19 2009.