Actions 8, 9, and 10 are grouped together by the OECD, as these items cover guidance on several key transfer pricing areas. A final report on these actions was released by the OECD as part of its 5 October 2015 package of final reports. Action 8 covers transfer pricing issues relating to transactions involving intangibles, as well as cost contribution arrangements (CCAs). Action 9 addresses the contractual allocation of risks and the resulting allocation of profits to those risks, which may not correspond with the activities actually carried out. The scope of Action 9 includes the transfer pricing considerations in respect of the level of returns to funding provided by a capital-rich group company. Action 10 focuses on other high-risk areas, such as the recharacterization of transactions, the use of transfer pricing methods in certain abusive situations, and management fees, among other things.
On 23 May 2016, the OECD’s governing body, the OECD Council, approved the amendments to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“OECD Guidelines”), as set out in the 2015 BEPS reports on Actions 8-10 and Action 13. A discussion draft on the changes to the OECD Guidelines was released on 4 July 2016. Amendments were reflected in the 2017 edition of the OECD Guidelines, released on 10 July 2017.
Following work previously undertaken by the OECD/G20 in relation to Actions 8-10 on aligning transfer pricing outcomes with value creation, two consensus reports were released by the OECD in June 2018.
One consensus report contains guidance on the use of the profit split method and expands the guidance on determining when the profit split method may be applied. The guidance on the application of the profit split method was incorporated into the OECD Guidelines, replacing the previous text.
The other consensus report provides guidance on the approach to be adopted for hard-to-value intangibles (HTVI) and aims to provide a common understanding among tax authorities on how to apply adjustments resulting from the application of this approach. The guidance on HTVI also was incorporated into the OECD Guidelines, as an annex to chapter VI.
On 11 February 2020, the OECD released final guidance on the transfer pricing aspects of financial transactions. The guidance will be incorporated into the OECD Guidelines, at chapter I and chapter X. This will be the first time guidance and examples on the transfer pricing aspects of financial transactions will be included in the OECD Guidelines.
The OECD also has published a number of Transfer Pricing profiles for countries.