OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2009

image of OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2009

OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations provides guidance on the application of the "arm's length principle" for valuation for tax purposes of cross-border transactions between associated enterprises. In a global economy where multinational enterprises (MNEs) play a prominent role, governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation that may result from a dispute between two countries on the determination of the arm’s length remuneration for their cross-border transactions with associated enterprises.

The OECD Transfer Pricing Guidelines clarifies these issues and were originally approved by the OECD Council in 1995. In this 2009 edition, some amendments have been made to Chapter IV, primarily to reflect the adoption, in the 2008 update of the Model Tax Convention, of a new paragraph 5 of Article 25 dealing with arbitration, and of changes to the Commentary on Article 25 on mutual agreement procedures to resolve cross-border tax disputes.

English French


Cost Contribution Arrangements

This chapter discusses cost contribution arrangements (CCAs) between two or more associated enterprises (possibly along with independent enterprises). There are many types of CCAs and this chapter does not intend to discuss or describe the tax consequences of every variation. Rather, the purpose of the chapter is to provide some general guidance for determining whether the conditions established by associated enterprises for a CCA are consistent with the arm's length principle. The tax consequences of a CCA will depend upon whether the arrangement is structured in accordance with the arm’s length principle according to the provisions of this chapter and is adequately documented. This chapter does not resolve all significant issues regarding the administration and tax consequences of CCAs. For example, further guidance may be needed on measuring the value of contributions to CCAs, in particular regarding when cost or market prices are appropriate, and the effect of government subsidies or tax incentives (see paragraphs 8.15 and 8.17). Further development might also be useful regarding the tax characterisation of contributions, balancing payments and buy-in/buy-out payments (see paragraphs 8.23, 8.25, 8.33 and 8.35). Additional work will be undertaken as necessary to update and elaborate this chapter as more experience is gained in the actual operation of CCAs.

English French

This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error