OECD - “White paper” on transfer pricing documentation 

July 30:  The Organisation for Economic Co-operation and Development (OECD) today released a “white paper” on transfer pricing documentation.

The OECD’s White Paper on Transfer Pricing Documentation [PDF 461 KB] was developed by the OECD’s Working Party No. 6 and released today, with a request for public comments as to how transfer pricing documentation rules can be improved, standardized and simplified. Comments are due 1 October 2013.


The OECD also invites comments on whether additional or other possible mechanisms can be developed for complying with the transfer pricing documentation elements of the BEPS action plan (released 19 July 2013). Read TaxNewsFlash-Transfer Pricing: OECD - Action plan to counter base erosion, profit shifting

Background - Transfer pricing documentation

The OECD reports that over the past 20 years, transfer pricing documentation requirements have rapidly spread around the world and that this trend continues every year with new additions to the list of countries requiring preparation of transfer pricing documentation.


Transfer pricing documentation is a top tax compliance priority of both tax authorities and businesses given:


  • The proliferation of diverse local transfer pricing documentation requirements
  • The dramatic increase in the volume and complexity of international intra-group trade
  • The heightened scrutiny of transfer pricing issues by tax authorities

In November 2011, Working Party No. 6 of the OECD Committee on Fiscal Affairs approved a program focused on transfer pricing simplification, and included a project on the simplification or streamlining of transfer pricing documentation requirements.

OECD action plan

In the OECD action plan on base erosion and profit shifting (BEPS), one of the 15 actions—Action 13—states that the OECD will:

…develop rules regarding transfer pricing documentation to enhance transparency for tax administration, taking into consideration the compliance costs for business. The rules to be developed will include a requirement that [multinational enterprises] provide all relevant governments with needed information on their global allocation of the income, economic activity and taxes paid among countries, according to a common template.

OECD white paper

Today’s White Paper on Transfer Pricing Documentation:


  • Surveys the current state of affairs regarding transfer pricing documentation
  • Considers the purposes and objectives of transfer pricing documentation
  • Includes suggestions as to how transfer pricing documentation rules might be modified to make transfer pricing compliance simpler and more straightforward, while also providing tax authorities with more focused and useful information for consideration in connection with transfer pricing risk assessment and transfer pricing audits
  • Notes that clear and accurate understanding of transfer pricing risk features will often require more information of a “big picture” nature than is often obtained through existing individual country-focused documentation requirements
  • Suggests a two tiered approach through which both the “big picture” information is made available for risk assessment purposes and detailed information on the related-party transactions can be required when the arm’s length character of specific transactions needs to be assessed

The OECD stated that the work reflected in today’s white paper is of direct relevance for and will be integrated with the work on transfer pricing documentation identified in the BEPS action plan.




©2013 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.


The KPMG logo and name are trademarks of KPMG International.


KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.


The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Direct comments, including requests for subscriptions, to us-kpmgwnt@kpmg.com.
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.

Share this

Share this

Subscribe

Current and future KPMG clients may subscribe to TaxNewsFlash email alerts.


Email your contact information.

Other TaxNewsFlash publications

TaxNewsFlash-United States by year