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18 August 2010
Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations
The Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations provide guidance on the application of the "arm's length principle" for the valuation, for tax purposes, of cross-border transactions between associated enterprises. In a global economy where multinational enterprises (MNEs) play a prominent role, governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation that may result from a dispute between two countries on the determination of the arm’s length remuneration for their cross-border transactions with associated enterprises.
The Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations were originally approved by the OECD Council in 1995. They were completed with additional guidance on cross-border services, intangibles, costs contribution arrangements and advance pricing arrangements in 1996-1999. In the 2009 edition, some amendments were made to Chapter IV, primarily to reflect the latest developments on dispute resolution.
In 2010, Chapters I-III were substantially revised with the addition of new guidance on the selection of the most appropriate transfer pricing method to the circumstances of the case, on how to apply transactional profit methods (the transactional net margin method and the profit split method) and on how to perform a comparability analysis. Furthermore, a new Chapter IX was added, dealing with the transfer pricing aspects of business restructurings.
Table of contents
Chapter I: The Arm's Length Principle
Chapter II: Transfer Pricing Methods
Chapter III: Comparability Analysis
Chapter IV: Administrative Approaches to Avoiding and Resolving Transfer Pricing Disputes
Chapter V: Documentation
Chapter VI: Special Considerations for Intangible Property
Chapter VII: Special Considerations for Intra-Group Services
Chapter VIII: Cost Contribution Arrangements
Chapter IX: Transfer Pricing Aspects of Business Restructuring
Council Recommendation on the Determination of Transfer Pricing between Associated Enterprises [C(95)126/FINAL]
How to obtain this publication
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