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New OECD transfer pricing guidance

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The OECD has published new guidance for tax administrations and businesses on the application of transfer pricing rules during the coronavirus pandemic. In a client briefing, DLA Piper observed the following points from the new guidance:

  • Legal agreements are the starting point when examining the impact of the COVID-19 pandemic.
  • It cannot be presumed that the pandemic would change the pricing in a controlled transaction; however, where the arm’s length price is determined on an annual basis, it will be necessary to perform a comparability analysis for the specific years affected by the pandemic.
  • A practical approach should be adopted to contemporaneous documentation.
  • The documentation should be taxpayer and transaction specific.
  • Limited risk entities may incur certain covid-19 losses and bear specific pandemic costs.
  • Impact of government assistance would have to be analysed.
  • Engage proactively with tax authorities on existing APAs and ongoing APA negotiations.
Issue: 1514
Categories: News