OECD issues Revised Discussion Draft on the Transfer Pricing Aspects of Intangibles
On 30 July 2013, the Organisation for Economic Cooperation and Development (OECD) issued a Revised Discussion Draft on the Transfer Pricing Aspects of Intangibles (Revised Discussion Draft). This Revised Discussion Draft updates the initial discussion draft issued on 6 June 2012 (Discussion Draft) and has been amended in the light of comments received during the public consultation process held in November 2012.
Key changes in the Revised Discussion Draft are:
- New guidance on the transfer pricing treatment of local market features, location savings, assembled workforce and group synergies;
- An amendment to the proposed definition of “intangible” for transfer pricing purposes;
- Amendments to the proposed guidance on identifying entities entitled to intangible-related returns, while maintaining the approach that intangible related returns should be aligned to the functions, assets and risks associated with intangible development and exploitation;
- Guidance on how the funding of intangible development should be remunerated at arm’s length;
- New guidance on payments between related parties for the use of the company or group name; and
- A reorganization of the proposed guidance on the practical application of transfer pricing methods to intangible transactions.
The OECD has requested interested parties to provide written comments on the Revised Discussion Draft on or before 1 October 2013. The OECD intends to hold a further public consultation on the Revised Discussion Draft and other topics on 12 – 13 November 2013 in Paris, France.
The detailed discussion in annex provides:
- The context in which the Revised Discussion Draft has been issued, and its role as part of the OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS) as released on 19 July 2013; and
- An overview in greater detail of some of the key areas of proposed new guidance and changes to the prior Discussion Draft.
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