Guidelines of the Organization for Economic Cooperation and Development (OECD)
Panama City, April 10, 2023
The Guidelines of the Organization for Economic Cooperation and Development (OECD) on transfer pricing constitute the most accepted international framework for the taxation of cross-border transactions between associated companies. The Guidelines provide guidance on the application of the arm’s length principle, a fundamental element in the implementation of international transfer pricing. They also provide guidance on selecting an appropriate transfer pricing method, determining arm’s length pricing, and documenting transfer pricing transactions.
The Guidelines are designed to provide a consistent and equitable approach to transfer pricing across countries, while allowing governments to ensure that associated companies pay their fair share of tax. The Guidelines are regularly updated to reflect changes in the international tax landscape and are accepted by more than 100 countries.
The 2022 edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations introduces several new topics to the existing guidelines.
These include:
- Greater emphasis on the use of comparability analysis to determine transfer pricing results.
- An increased focus on the use of digital technologies to help manage and control transfer pricing risks.
- New provisions to help ensure that tax administrations can better access relevant information to assess and audit transfer pricing agreements.
In addition, the new edition clarifies the application of the OECD Transfer Pricing Guidelines to different types of entities and transactions. Finally, the new edition includes additional guidance on the application of the arm’s length principle in the context of the recently introduced BEPS measures.
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