2017 OECD Transfer Pricing Guidelines

On 10 July 2017, the long awaited 2017 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2017 Transfer Pricing Guidelines) were released. The new edition counting 612 pages replaces the previous Transfer Pricing Guidelines issued in 2010 (2010 Transfer Pricing Guidelines) and provides new guidance on the application of the arm’s length principle.

The 2017 Transfer Pricing Guidelines are intended to be a revision and compilation of previous reports published by the OECD addressing transfer pricing and other related tax issues. It reflects the outcomes of the OECD’s Base Erosion and Profit Shifting Project (BEPS) and includes revised guidance on safe harbours. Many consistency changes have been incorporated to produce a more consolidated version of the OECD Transfer Pricing Guidelines. 
 
The main changes of the new 2017 OECD Transfer Pricing Guidelines can be found in the following areas:
 
  • intangibles (newly defined categories, functions, risks and so called DEMPE analysis);
  • low value adding intragroup services;
  • transfer pricing documentation (a three-tiered approach, i.e. master files, local files and country-by -country reporting);
  • application of arm’s length principle;
  • comparability factors in transfer pricing, including location savings, assembled workforce and multinational group synergies;
  • cost contribution arrangements and their expected benefits.
OECD is continuously working on the transfer pricing area to improve guidance in all necessary areas such as hard-to-value intangibles and the transactional profit split method. It also aims to identify new areas that need to be addressed. Therefore, further guidance can be expected. 
 
The Czech Republic has followed the OECD Guidelines on Transfer Pricing and it is expected that local regulations, namely instructions issued by the Ministry of Finance, will be updated to reflect the release of the 2017 Transfer Pricing Guidelines. 
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