OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022

658 Pages·2022·4.068 MB·English

by  OECD

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January 2022

OECD Transfer
Pricing Guidelines
for Multinational
Enterprises and Tax
Administrations
2022
This document, as well as any data and map included herein, are without prejudice to the
status of or sovereignty over any territory, to the delimitation of international frontiers and
boundaries and to the name of any territory, city or area.
Please cite this publication as:
OECD (2022), OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax
Administrations 2022, OECD Publishing, Paris, https://doi.org/10.1787/0e655865-en.
ISBN 978-92-64-52691-4 (print)
ISBN 978-92-64-92191-7 (pdf)
OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations
ISSN 2076-9709 (print)
ISSN 2076-9717 (online)
Corrigenda to publications may be found on line at: www.oecd.org/about/publishing/corrigenda.htm.
© OECD 2022
The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at
http://www.oecd.org/termsandconditions.
FOREWORD – 3
Foreword
These Guidelines are a revision of the OECD Report Transfer Pricing
and Multinational Enterprises (1979). They were approved in their original
version by the Committee on Fiscal Affairs on 27 June 1995 and by the
OECD Council for publication on 13 July 1995.
Since their original version, these Guidelines have been supplemented:
• By the report on intangible property and services, adopted by the
Committee on Fiscal Affairs on 23 January 1996 [DAFFE/CFA(96)2]
and noted by the Council on 11 April 1996 [C(96)46], incorporated in
Chapters VI and VII;
• By the report on cost contribution arrangements, adopted by the
Committee on Fiscal Affairs on 25 June 1997 [DAFFE/CFA(97)27]
and noted by the Council on 24 July 1997 [C(97)144], incorporated
in Chapter VIII;
• By the report on the guidelines for monitoring procedures on the
OECD Transfer Pricing Guidelines and the involvement of the
business community [DAFFE/CFA/WD(97)11/REV1], adopted by
the Committee on Fiscal Affairs on 24 June 1997 and noted by the
Council on 23 October 1997 [C(97)196], incorporated in the annexes;
• By the report on the guidelines for conducting advance pricing
arrangements under the mutual agreement procedure, adopted
by the Committee on Fiscal Affairs on 30 June 1999 [DAFFE/
CFA(99)31] and noted by the Council on 28 October 1999 [C(99)138],
incorporated in the annexes;
• By the report on the transfer pricing aspects of business
restructurings, adopted by the Committee on Fiscal Affairs on
22 June 2010 [CTPA/CFA(2010)46] and approved by the Council on
22 July 2010 [Annex I to C(2010)99], incorporated in Chapter IX;
• By the report on the guidance for tax administrations on the
application of the approach to hard-to-value intangibles, adopted
by the Committee on Fiscal Affairs on 4 June 2018 [CTPA/CFA/
NOE2(2018)25], incorporated in the annexes; and,
OECD TRANSFER PRICING GUIDELINES © OECD 2022
4 – FOREWORD
• By the report on the transfer pricing aspects of financial transactions,
adopted by the Committee on Fiscal Affairs on 20 January 2020
[CTPA/CFA/NOE2(2019)75], incorporated in Section D.1.2.2 of
Chapter I and in Chapter X.
In addition, these Guidelines have been modified:
• By an update of Chapter IV, adopted by the Committee on Fiscal
Affairs on 6 June 2008 [CTPA/CFA(2008)30/REV1] and an update of
the Foreword and of the Preface, adopted by the Committee on Fiscal
Affairs on 22 June 2009 [CTPA/CFA(2009)51/REV1], approved by
the Council on 16 July 2009 [C(2009)88];
• By a revision of Chapters I-III, adopted by the Committee on Fiscal
Affairs on 22 June 2010 [CTPA/CFA(2010)55] and approved by the
Council on 22 July 2010 [Annex I to C(2010)99]; and
• By an update of the Foreword, of the Preface, of the Glossary, of
Chapters IV-VIII and of the annexes, adopted by the Committee on
Fiscal Affairs on 22 June 2010 [CTPA/CFA(2010)47] and approved by
the Council on 22 July 2010 [Annex I to C(2010)99].
• By a revision of Section E on safe harbours in Chapter IV, and the
addition of another Annex to this Chapter including three sample
Memoranda of Understanding to establish bilateral safe harbours,
adopted by the Committee on Fiscal Affairs on 26 April 2013
[CTPA/CFA(2013)23] and approved by the Council on 16 May 2013
[C(2013)69].
• By a revision of Chapters I, II, V-VIII by the Report on BEPS Actions
8-10 Aligning Transfer Pricing Outcomes with Value Creation and
the Report on BEPS Action 13, Transfer Pricing Documentation
and Country-by-Country Reporting, endorsed by the Council on
1 October 2015 [C(2015)125/ADD8 and C(2015)125/ADD11].
• By a revision of Chapter IX adopted by the Committee on Fiscal
Affairs on 31 December 2016 [CTPA/CFA/NOE2(2016)76] and
approved by the Council on 3 April 2017 [C(2017)37].
• By an update of the Foreword, of the Preface, of the Glossary, of
Chapters I-IV and of the annexes, adopted by the Committee on
Fiscal Affairs on 19 May 2017 [CTPA/CFA/NOE2(2017)21];
• By a revision of Section C on the transactional profit split method in
Part III of Chapter II and of the annexes, adopted by the Committee
on Fiscal Affairs on 4 June 2018 [CTPA/CFA/NOE2(2018)24].
OECD TRANSFER PRICING GUIDELINES © OECD 2022
FOREWORD – 5
• By an update of the Foreword, of the Preface, of the Glossary, of
Chapters I-IX and of the annexes, adopted by the Committee on
Fiscal Affairs on 7 January 2022 [CTPA/CFA/NOE2(2021)52].
These Guidelines will continue to be supplemented with additional
guidance addressing other aspects of transfer pricing and will be periodically
reviewed and revised on an ongoing basis.
OECD TRANSFER PRICING GUIDELINES © OECD 2022

TABLE OF CONTENTS – 7
Table of contents
Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Abbreviations and acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Chapter I. The arm’s length principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
B. Statement of the arm’s length principle. . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
C. A non-arm’s-length approach: global formulary apportionment. . . . . . . . . .34
D. Guidance for applying the arm’s length principle. . . . . . . . . . . . . . . . . . . . .39
Chapter II. Transfer pricing methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
Part I: Selection of the transfer pricing method . . . . . . . . . . . . . . . . . . . . . . . .93
A. S election of the most appropriate transfer pricing method to the
circumstances of the case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
B. Use of more than one method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
Part II: Traditional transaction methods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
B. Comparable uncontrolled price method. . . . . . . . . . . . . . . . . . . . . . . . . . . . .97
C. Resale price method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
D. Cost plus method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
Part III: Transactional profit methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
B. Transactional net margin method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113
C. Transactional profit split method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128
D. Conclusions on transactional profit methods. . . . . . . . . . . . . . . . . . . . . . . .147
OECD TRANSFER PRICING GUIDELINES © OECD 2022
8 – TABLE OF CONTENTS
Chapter III. Comparability analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149
A. Performing a comparability analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149
B. Timing issues in comparability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167
C. Compliance issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170
Chapter IV. Administrative approaches to avoiding and resolving transfer
pricing disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173
A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173
B. Transfer pricing compliance practices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .174
C. Corresponding adjustments and the mutual agreement procedure:
Articles 9 and 25 of the OECD Model Tax Convention . . . . . . . . . . . . . . .181
D. Simultaneous tax examinations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198
E. Safe harbours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203
F. Advance pricing arrangements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .213
G. Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .224
Chapter V. Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227
A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .227
B. Objectives of transfer pricing documentation requirements . . . . . . . . . . . .228
C. A three-tiered approach to transfer pricing documentation . . . . . . . . . . . .231
D. Compliance issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .233
E. Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .238
Chapter VI. Special considerations for intangibles. . . . . . . . . . . . . . . . . . . . . . .245
A. Identifying intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .246
B. O wnership of intangibles and transactions involving
the development, enhancement, maintenance,
protection and exploitation of intangibles . . . . . . . . . . . . . . . . . . . . . . . . . .255
C. Transactions involving the use or transfer of intangibles . . . . . . . . . . . . . .274
D. Supplemental guidance for determining arm’s length conditions
in cases involving intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .280
Chapter VII. Special considerations for intra-group services. . . . . . . . . . . . . .313
A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .313
B. Main issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .314
C. Some examples of intra-group services. . . . . . . . . . . . . . . . . . . . . . . . . . . .325
D. Low value-adding intra-group services. . . . . . . . . . . . . . . . . . . . . . . . . . . .326
Chapter VIII. Cost contribution arrangements. . . . . . . . . . . . . . . . . . . . . . . . . .337
A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .337
OECD TRANSFER PRICING GUIDELINES © OECD 2022