On Dec 18, 2020, the OECD released a document on its homepage providing information on how to deal with transfer pricing in the wake of the COVID-19 pandemic. The document gives insights in the thinking of the OECD experts on pandemic-triggered issues such as the comparability analysis for transfer pricing purposes, dealing with losses and the allocation of additional costs between related parties, and financial support from governments. Also, the impact of the crisis on critical assumptions of the advanced pricing agreements is addressed. The document’s key feature is the underlining of the concept of the ordinary and prudent businessman who will navigate its transfer pricing system as third parties would do.
Budget financial information, trial and error processes, and the averaging of the unique financials 2020 and 2021 across a wider coverage of financial years are in the heart of the document. It is to note that the new OECD Guidance refers to the OECD Transfer Pricing Guidelines (OECD TPG) 2017, which have been continuously advanced over the last years.
Yet, neither the OECD TPG nor the new Guidance are binding to local tax authorities and taxpayers. Hence, we recommend clients and taxpayers also to observe local guidance of ministries and governmental tax agencies, as well as local transfer pricing experts. Of course, we are happy to provide you with our views and arm’s length analyses on these challenges.
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info@GlobalTransferPricing.com