OECD White Paper on Transfer Pricing Documentation proposes coordinated approach based on a two-tier structure

Tax Controversy & Dispute Resolution ()

On July 30 2013, the OECD published its White Paper on Transfer Pricing Documentation (White Paper) as part of the ongoing workstream on transfer pricing simplification and following the inclusion of the matter in its Action Plan on Base Erosion and Profit Shifting (“BEPS” – Action 13, released on July 19, 2013).

Rapidly spreading local transfer pricing documentation requirements and the complexity of the rules have put the topic on the agenda of policy-makers. The OECD sees potential for standardisation to reduce compliance costs for taxpayers, but equally puts emphasis on the role that transfer pricing documentation can play for enhanced transparency and improved risk assessment. In this sense, the White Paper takes stock of existing approaches to harmonise transfer pricing documentation, but goes considerably further by proposing a Coordinated Approach to Documentation based on a two-tier structure.

The OECD is inviting public comments on the White Paper to obtain input from the business community and other interested non-governmental parties by October 1, 2013.