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OECD Proposes "Intangible" Transfer Pricing Guidance - by Rob Davis, Brian Mustard and Alexandre Mercier  

Global Tax Adviser


June 12, 2012


Rob Davis
Toronto, Transfer Pricing


Brian Mustard
Montreal, International Corporate Tax


Alexandre Mercier
Montreal, Transfer Pricing


A working party of the OECD Committee on Fiscal Affairs has released a discussion draft of proposed changes to the OECD's Transfer Pricing Guidelines in the form of a discussion draft on the transfer pricing aspects of intangibles. The OECD is inviting public comments on the discussion drafts by September 14, 2012. The OECD also released a discussion draft on the revision of the "safe harbours" guidelines and on transfer pricing timing issues.

Background - Transfer pricing aspects of intangibles
In July 2010, the OECD released a major revision of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (i.e., the OECD Transfer Pricing Guidelines). During the revision process, transfer pricing issues related to intangibles were identified as a key area of concern by governments and taxpayers due to insufficient international guidance on intangibles, particularly in the definition, identification, and valuation of intangibles. As a result, the OECD approved a project to focus on the transfer pricing aspects of intangibles. 


Proposed changes
The OECD working party recently released an interim discussion draft that proposes revisions to provisions of Chapter VI, "Special Consideration for Intangibles", and the examples of the guidelines in Annex to Chapter VI of the OECD Transfer Pricing Guidelines. The draft provides further guidance on:


  • Identifying intangibles
  • Identifying parties entitled to intangible-related returns
  • Transactions involving the use or transfer of intangibles
  • Determining arm's-length conditions in cases involving intangibles.


More changes to come
The OECD working party said it intends to release discussion drafts of additional proposed changes that address:


  • Any necessary modifications related to cost contribution arrangements that may be needed as a result of the modification of Chapter VI
  • The transfer pricing consequences of various items in this draft as comparability factors rather than intangibles, including market specific advantages, location-based advantages, corporate synergies and workforce issues
  • Any additional conforming changes required as a result of the changes to Chapter VI.


Other discussion drafts released
The OECD also recently released "Discussion draft on the revision of the ‘safe harbours’ section of Chapter IV of the OECD Transfer Pricing Guidelines". In addition, the OECD released a discussion draft on "Certain transfer pricing timing issues".


The OECD, as part of its objective to improve the administration of transfer pricing, published a survey in June 2011 about countries' measures to simplify the transfer pricing rules. This survey, which looks at 41 countries, has been updated.


For more information, contact your KPMG adviser.

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