lunes, 22 de mayo de 2017

Updated United Nations transfer pricing manual released

The United Nations has released the second edition of its Practical Manual on Transfer Pricing for Developing Countries. Eponymously, the U.N. manual focuses on transfer pricing in developing countries. It is intended to not only draw upon the experience of the first edition of the manual but also reflect the developments in the area of transfer pricing analysis and administration since the first edition was published in 2013.  

The update is based on the principles listed below:

  • Reflect the operation of Article 9 of the United Nations Model Convention, and the Arm’s-Length Principle embodied in it, consistent with relevant Commentaries of the U.N. model
  • Reflect the realities for developing countries, at their relevant stages of capacity development
  • Pay special attention to the experience of developing countries
  • Draw upon the work being done in other fora

The updated manual aligns with recent Organisation for Economic Co-operation and Development (OECD) guidance, including new chapters on intragroup services, intangibles and cost contribution arrangements. The manual also incorporates key concepts from base erosion and profit shifting action items eight, nine and 10, and discusses countries adopting the country-by-country reporting template developed by the OECD. The revised manual is more than 150 pages longer than the first edition.

The second edition also includes an additional transfer pricing method for consideration. This new method, referred to as the Sixth Method or Commodity Rule, is applicable for pricing commodity transactions. The manual indicates the method has been used in several countries, primarily in Latin America.

Application of the Sixth Method is further expounded in the manual, but it is not summarily defined as a preferred approach and leaves considerable room for interpretation. For example, the manual lists the Sixth Method with other profit-based methods, such as the comparable profits method, transactional net margin method and profit split methods. However, in application, the manual indicates the Sixth Method is akin to other transaction-based methods, such as the comparable uncontrolled price method.

As with the first edition, whether the second edition of the UN transfer pricing manual is seen as guidance for developing nations or precedential material defended with regulatory vigor remains to be seen. In total, the manual seems to be intended more as a repository of experiences from various countries than as a guideline for regulatory consideration, and any perceived inconsistencies within the document seem to indicate the same. Regardless, taxpayers should deliberately and consistently revisit their transfer pricing documentation to ensure it is appropriate in light of ongoing international tax initiatives.

Source: RSM

No hay comentarios:

Publicar un comentario