In June 2012, the OECD released a discussion draft on the revision of the "safe harbours" guidelines and on transfer pricing timing issues as part of its project to improve the administrative aspects of transfer pricing.
The OECD notes that, previously, the Transfer Pricing Guidelines took a somewhat negative tone on transfer pricing safe harbours that did not accurately reflect the practice of OECD Member countries. Also, the previous guidance was largely silent with regard to the possibility of a bilateral agreement establishing a safe harbour, even though some countries have favourable experience with such bilateral agreements.
Transfer Pricing Guideline revisions
The OECD says that its draft proposed revision of the guidance recognizes that properly designed safe harbours can help relieve some compliance burdens and provide taxpayers with greater certainty. The guidance encourages the use of bilateral or multilateral safe harbours, which may provide a significant relief from compliance burdens without creating problems of double taxation or double non-taxation. To facilitate negotiations between tax administrations, the guidance provides sample Memoranda of Understanding for competent authorities to establish bilateral safe harbours for certain classes of transfer pricing cases.
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