OECD Transfer Pricing Guidelines for Multinational ...

1 ISBN 978-92-64-09033-0 23 2010 09 1 Pw w w. o e c d . o rgJuly 2010 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations-:HSTCQE=U^UXXU:OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax AdministrationsThe OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations provide guidance on the application of the arm s length principle , which is the international consensus on Transfer Pricing , on the valuation, for tax purposes, of cross-border transactions between associated enterprises.

2 In a global economy where Multinational enterprises (MNEs) play a prominent role, Transfer Pricing is high on the agenda of tax administrators and taxpayers alike. Governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdictions and that the tax base reported by MNEs in their respective countries reflects the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation that may result from a dispute between two countries on the determination of an arm s length remuneration for their cross-border transactions with associated enterprises.

3 The OECD Transfer Pricing Guidelines were approved by the OECD Council in their original version in 1995. A limited update was made in 2009, primarily to reflect the adoption, in the 2008 update of the Model Tax Convention, of a new paragraph 5 of Article 25 dealing with arbitration, and of changes to the Commentary on Article 25 on mutual agreement procedures to resolve cross-border tax disputes. In the 2010 edition, Chapters I-III were substantially revised, with new guidance on the selection of the most appropriate Transfer Pricing method to the circumstances of the case, the practical application of transactional profit methods (transactional net margin method and profit split method) and the performance of comparability analyses.

4 Furthermore, a new Chapter IX, on the Transfer Pricing aspects of business restructurings, was added. Consistency changes were made to the rest of the OECD Transfer Pricing OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax AdministrationsJULY 2010 AnOECDB rowse_itEditionLectureseuleylnO daeRAbout OECD Browse_it editions In a traditional bookshop you can browse the display copies from cover-to-cover, free of charge. Wouldn t it be good to be able to do the same online? Now you can. OECD s Browse_it editions allow you to browse our books, online, from cover-to-cover.

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7 For more details about SourceOECD visit or email for a list. OECD Transfer Pricing Guidelines for Multinational Enterprises andTax Administrations22 JULY 2010 AnOECDB rowse_itEditionLectureseuleylnO daeRORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENTThe OECD is a unique forum where governments work together to address the economic,social and environmental challenges of globalisation. The OECD is also at the forefront of effortsto understand and to help governments respond to new developments and concerns, such ascorporate governance, the information economy and the challenges of an ageing Organisation provides a setting where governments can compare policy experiences, seekanswers to common problems, identify good practice and work to co-ordinate domestic andinternational OECD member countries are.

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9 Principes de l'OCDE applicables en mati re de prix de transfert l'intention des entreprisesmultinationales et des administrations fiscalesCorrigenda to OECD publications may be found on line at: OECD 2010 You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications,databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, providedthat suitable acknowledgment of OECD as source and copyright owner is given.

10 All requests for public or commercial use andtranslation rights should be submitted to Requests for permission to photocopy portions of this material forpublic or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at ais d exploitation du droit de copie (CFC) at daeRFOREWORD 3 OECD Transfer Pricing Guidelines OECD 2010 ForewordThese Guidelines are a revision of the OECD Report Transfer Pricing and Multinational Enterprises (1979). They were approved in their original version by the Committee on Fiscal Affairs on 27 June 1995 and by the OECD Council for publication on 13 July 1995.