On 23 December 2016, the World Bank Group published a transfer pricing handbook “Transfer Pricing and Developing Economies: A Handbook for Policy Makers and Practitioners”. The abstract is reproduced below and the full handbook is here.
The Handbook, which comprises eight chapters (outlined here), does not purport to be a substitute or an alternative to the existing OECD Guidelines and UN Manual.
Rather, the Handbook draws on the practical lessons learned by the World Bank Group and other international organisations in working with governments around the globe to design and implement transfer pricing rules.
In this regard, the Handbook provides technical guidance and country examples to assist policy makers and practitioners with the design, implementation and administration of transfer pricing rules based on international practices.
“Recent years have seen unprecedented public scrutiny over the tax practices of Multinational Enterprise (MNE) groups.
Tax policy and administration concerning international transactions, aggressive tax planning, and tax avoidance have become an issue of extensive national and international debate in developed and developing countries alike.
Within this context, transfer pricing, historically a subject of limited specialist interest, has attained name recognition amongst a broader global audience that is concerned with equitable fiscal policy and sustainable development.
Abusive transfer pricing practices are considered to pose major risk to the direct tax base of many countries and developing countries are particularly vulnerable because corporate tax tends to account for a larger share of their revenue.
This handbook is part of the wider WBG engagement in supporting countries with Domestic Resource Mobilization (DRM) by protecting their tax base and aims to cover all relevant aspects that have to be considered when introducing or strengthening transfer pricing regimes.
The handbook provides guidance on analytical steps that can be taken to understand a country’s potential exposure to inappropriate transfer pricing (transfer mispricing) and outlines the main areas that require attention in the design and implementation of transfer pricing regimes.
A discussion of relevant aspects of the legislative process, including the formulation of a transfer pricing policy, and the role and content of administrative guidance, is combined with the presentation of country examples on the practical application and implementation of the arm’s length principle and on running an effective transfer pricing audit program.
Recognizing the importance of transfer pricing regulation and administration for the business environment and investor confidence, this handbook aims to balance the general objective of protecting a country’s tax base and raising additional revenue with investment climate considerations wherever appropriate.”