The OECD releases the 2022 edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations on 20 January 2022.
The OECD Guidelines for Multinational Enterprises are recommendations addressed by governments to multinational enterprises operating in or from adhering countries. They provide non-binding principles and standards for responsible business conduct in a global context consistent with applicable laws and internationally recognized standards. The Guidelines are the only multilaterally agreed and comprehensive code of responsible business conduct that governments have committed to promoting.
The OECD Transfer Pricing Guidelines provide guidance on the application of the arm’s length principle and are an important source of interpretation in Turkey and internationally.
The new version includes revised guidance on the transactional profit split method, guidance for tax administrations on the application of the approach to hard-to-value intangibles and transfer pricing guidance for financial transactions. Also, consistency changes have been made to the rest of the OECD Transfer Pricing Guidelines.
The guidance on the application of the transactional profit split method was issued in 2018 and its aim to help determine when the profit split method may be the case is the most appropriate method to apply. It also contains how to apply the method as well as numerous examples.
The guidance on the application of the approach to hard-to-value intangibles was issued in 2018, and it includes a number of examples to clarify the application of the hard-to-value intangibles approach in different scenarios and addresses the interaction between the hard-to-value intangibles approach and the access to the mutual agreement procedure under the applicable tax treaty.
The final form of new guidance on financial transactions was issued in 2020, this report is significant because it is the first time the OECD Transfer Pricing Guidelines includes guidance on the transfer pricing aspects of financial transactions, which will contribute to consistency in the interpretation of the arm’s length principle and help avoid transfer pricing disputes and double taxation. This section provides illustrative examples of the transfer pricing aspects of financial transactions.
The publication and a press release can be found here.