On January 20, 2022, the Organization for Economic Co-operation and Development (OECD) published the 2022 edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD TP Guidelines). The new guidelines represent an international consensus in establishing and applying the arm’s length principle, and in determining the marketability of cross-border transactions between affiliates.
The release of the OECD TP Guidelines for 2022 thus reflects the consolidation of several reports from the OECD / G20 Base Erosion And Profit Shifting (BEPS) Action Plan, and includes three revisions of the 2017 edition:
- revised guidelines on the transactional profits split method (approved by the OECD/Inclusive Framework on BEPS in 2018);
- guidelines for Tax Administrations on the application of the approach to hard-to-value intangibles;
- transfer pricing guidelines for financial transactions adopted in 2020; and
- other OECD transfer pricing guidelines setting out alignment with a view to increasing consistency.
Multinational companies are playing an increasingly important role in today’s economy, and transfer pricing remains highly ranked on the scale of liabilities of Tax Administrations and taxpayers. Governments are obliged to ensure that the taxable profits of multinational companies are not transferred from their jurisdiction and that multinational companies declare the tax base in the country where the economic activity takes place. Taxpayers who need clear guidance on the proper application of the arm’s length principle should also be borne in mind.
You can find more details on this topic on the OECD website.
