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Discussion draft published on BEPS action 8

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The OECD invites comments by 29 May 2015 on a discussion draft for action 8 of the BEPS action plan, setting out a proposed revision to the transfer pricing guidelines in relation to cost contribution arrangements involving intangibles.

Action 8 (‘Assure that transfer pricing outcomes are in line with value creation: intangibles’) requires the development of ‘rules to prevent BEPS by moving intangibles among group members’ and involves updating the guidance on cost contribution arrangements. A cost contribution arrangement is defined as ‘a contractual arrangement among business enterprises to share the contributions and risks involved in the joint development, production or the obtaining of intangibles, tangible assets or services with the understanding that such intangibles, tangible assets or services are expected to create direct benefits for the businesses of each of the participants’. These fall broadly into two categories:

  • development cost contribution arrangements, which are ‘established for the joint development, enhancement, maintenance, protection or exploitation of intangibles or tangible assets’; and
  • services cost contribution arrangements, which are for obtaining services.

The discussion draft sets out a proposed revision to chapter VIII of the OECD’s transfer pricing guidelines and is intended to align the guidance in that chapter with the other elements of action 8 already addressed in the OECD’s guidance on transfer pricing aspects of intangibles released in September 2014.

Interested parties are invited to submit written comments by 29 May 2015 (no extension will be granted) and should be sent by email in both PDF and Word format. They should be addressed to Andrew Hickman, head of transfer pricing unit, OECD Centre for Tax Policy and Administration. A public consultation meeting on this topic will be held in Paris at the OECD conference centre on 6–7 July 2015.