BDO Transfer Pricing News

Introduction

The OECD recently released an annex to the OECD Transfer Pricing Guidelines implementing Amount B,   a simplified and streamlined application of the arm’s length principle for baseline distribution activities. But  this will not be the last word on this topic, as it leaves open many questions regarding implementation and compliance.

Global jurisdictions continue to refine their transfer pricing regimes; for example, Malta has followed up its introduction in late 2023 of transfer pricing laws with the issuance of transfer pricing guidelines. Cameroon has enacted a country-by-country (CbC) reporting requirement, and Australia is considering draft legislation on a proposed public CbC regime.

The UK transfer pricing landscape is also in flux, as discussed in our report on the June 2023 consultation on potential reforms to the transfer pricing, permanent establishments, and diverted profits tax rules. The government’s comments on the responses provide a useful insight into the tax authorities’ thinking and the complexities still to be addressed before draft legislation is published. Interestingly, the UK’s latest statistics show a marked increase in the yield from enquiries into transfer pricing arrangements, which suggests interest in this area will continue unabated.

In U.S. news, the IRS issued a generic legal advice memorandum that explains the agency’s position on the effect of group membership in determining the arm’s length rate of interest chargeable for intragroup loans.

The impact of transfer pricing regimes may reach into unexpected areas; for example, we include a report on the effect of EU tax and transfer pricing rules into the field of mergers and acquisitions.