Arm’s Length Principle

TP Back to Basics – The Arm’s Length Principle

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This article is accompanied by a slide presentation on YouTube. Feel free to use my material for your own in-house purposes, all I ask is that you acknowledge the source. Read the rest of this entry »


BEPS amendments to Chapter 1 of the OECD TP Guidelines

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The 2013 Organisation for Economic Co-operation and Development (OECD) Action Plan on Base Erosion and Profit Shifting (BEPS) recognised that existing internationally agreed rules for transfer pricing could be misapplied, resulting in outcomes where the allocation of profits is not aligned with the economic activity that produced those profits.

Of the fifteen Action Points in the BEPS Project, Actions 8 – 10 directly addressed transfer pricing and the arm’s length principle. Read the rest of this entry »

Public Discussion Draft, BEPS ACTIONS 8-10, Revised Guidance on Profit Splits

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Source: OECD discussion Draft

Public comments are invited on this discussion draft which deals with the clarification and strengthening of the guidance on the transactional profit split method, as set out in the BEPS Actions 8-10, 2015 Final Report.

Comments should be submitted by 5 September 2016 (no extension will be granted) and should be sent by email to in Word format (in order to facilitate their distribution to government officials).

They should be addressed to the Tax Treaties, Transfer Pricing and Financial Transactions Division, OECD/CTPA. Comments in excess of ten pages should attach an executive summary limited to two pages.

OECD Discussion Draft here

How will the new BEPS Action 4 interest restriction rules affect UK ATCAs?

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Advance Thin Capitalisation Agreements (ATCAs) are provided in the UK under the Advance Pricing Agreement legislation, to determine in advance the transfer pricing of financial transactions within Part 4 of TIOPA 2010.

The legal basis for ATCAs is provided by the legislation at TIOPA 2010, sections 218 to 230, which provides for Advance Pricing Agreements (APAs) in relation to transfer pricing more broadly.

The ATCA process is initiated by the business, in accordance with TIOPA 2010, section 223, as an application for clarification by agreement of the effect of applying the arm’s length principle to the financial provisions between the business and lenders.

Read the rest of this entry »

OECD Council approves incorporation of BEPS amendments into the Transfer Pricing Guidelines

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Source: OECD Press Release 15.06.2016

It has been announced that on 23 May 2016, the OECD Council approved the amendments to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, as set out in the 2015 BEPS Report on Actions 8-10 “Aligning Transfer Pricing Outcomes with Value Creation” and the 2015 BEPS Report on Action 13 “Transfer Pricing Documentation and Country-by-Country Reporting”.

The amendments approved by the Council translate these BEPS transfer pricing measures into the Transfer Pricing Guidelines.

Given the way in which the Transfer Pricing Guidelines are integrated into the domestic law of certain countries, including by direct reference to the Guidelines themselves, this update process further clarifies the status of the BEPS changes to the Transfer Pricing Guidelines.

Read the full OECD Press Release here