22 JULY 2010
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
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ISBN 978-92-64-09033-0 (print) ISBN 978-92-64-09018-7 (PDF)
Also available in French: Principes de l'OCDE applicables en matière de prix de transfert à l'intention des entreprisesmultinationales et des administrations fiscales
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© OECD 2010
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NEW GUIDELINES FOR NEW REALITIES
New Guidelines for New Realities
A view from KPMG’s team of transfer pricing professionals*
On July 22, 2010, the OECD released a new edition of transfer pricing guidelines that (i) updated prior guidance in Chapters I – III, and (ii) provided new guidance on the transfer pricing issues presented in the context of businessrestructuring. These new Guidelines represent the results of several years of intensive work on the part of the OECD exploring issues related to comparability, the use of transactional profits methods, and business restructuring. Perhaps the most important outcome of this work is a strong re-affirmation that the pricing of transactions among associated enterprises should be based on the arm’s-lengthprinciple, i.e. that the pricing should reflect the conditions that would have been agreed to had the transaction taken place between comparable unrelated entities. Thus, the goal of the OECD Transfer Pricing Guidelines remains the same, even though the detailed guidance on how to reach this goal has been updated in several important respects. Another welcome development is that the new Guidelinesreaffirm, as was the case in 1995, that tax authorities should respect the transaction actually undertaken by the taxpayer in all but exceptional circumstances, which are defined in the new Guidelines as “rare” or “unusual.” Such exceptional cases are defined as situations in which (i) the substance of a transaction differs from its form or (ii) the arrangements made in relation to the transaction,...