Wednesday, 6 June 2012

OECD Working Party No. 6 releases a discussion draft on the revision of the Safe Harbours section of the Transfer Pricing Guidelines

Working Party No. 6 of the OECD Committee on Fiscal Affairs has released a discussion draft on safe harbours as part of its project to improve the administrative aspects of transfer pricing. This project started with a survey of the transfer pricing simplification measures in existence in OECD and non-OECD countries and led WP6 to review the current guidance on safe harbours in Chapter IV of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“TPG”).
The current guidance in the TPG has a somewhat negative tone regarding transfer pricing safe harbours. This negative tone does not accurately reflect the practice of OECD member countries, a number of which have adopted transfer pricing safe harbour provisions. Also, the current guidance is largely silent with regard to the possibility of a bilateral agreement establishing a safe harbour, even though some countries have favourable experience with such bilateral agreements.
This discussion draft includes proposed revisions of the section on safe harbours in Chapter IV of the TPG and associated sample memoranda of understanding for competent authorities to establish bilateral safe harbours.
Source: OECD