The OECD will use a new multi-country analysis of transfer pricing simplification measures to inform its work on a project, launched in March, aimed at striking ‘a balance between the development of sophisticated guidance for complex transactions and the cost-effective use of taxpayers’ and tax administrations’ resources for improved compliance and enforcement processes’.
Comments were invited on 9 March on the effectiveness of various forms of simplification measures, including safe harbours, and a review of the existing guidance on safe harbours in Chapter IV of the Transfer Pricing Guidelines to reflect experience acquired since 1995.
Countries often have scarce administrative resources to enforce transfer pricing rules, says the report. ‘At the same time, taxpayers are facing increasing compliance requirements and transfer pricing audit activities worldwide. Many commentators therefore urge governments to direct compliance and enforcement efforts to the riskiest, biggest and most complex transactions.’
The OECD analysis found that more than 70% of the available simplification measures are directed to SMEs, small transactions and low-value-added services.
The UK’s detailed response to the survey said that a general assessment of the transfer pricing risks of an multi-national enterprise will include ‘a consideration of the level of controlled transactions and hence tax at risk’.
A general obligation to comply with the arm’s length principle was introduced in the UK in 1915, and is now found in TIOPA 2010 s 147. Sections 166 and 172 provide an exemption for small and medium-sized enterprises as defined in the annex to the EC recommendation 2003/361/EC.
The OECD will use a new multi-country analysis of transfer pricing simplification measures to inform its work on a project, launched in March, aimed at striking ‘a balance between the development of sophisticated guidance for complex transactions and the cost-effective use of taxpayers’ and tax administrations’ resources for improved compliance and enforcement processes’.
Comments were invited on 9 March on the effectiveness of various forms of simplification measures, including safe harbours, and a review of the existing guidance on safe harbours in Chapter IV of the Transfer Pricing Guidelines to reflect experience acquired since 1995.
Countries often have scarce administrative resources to enforce transfer pricing rules, says the report. ‘At the same time, taxpayers are facing increasing compliance requirements and transfer pricing audit activities worldwide. Many commentators therefore urge governments to direct compliance and enforcement efforts to the riskiest, biggest and most complex transactions.’
The OECD analysis found that more than 70% of the available simplification measures are directed to SMEs, small transactions and low-value-added services.
The UK’s detailed response to the survey said that a general assessment of the transfer pricing risks of an multi-national enterprise will include ‘a consideration of the level of controlled transactions and hence tax at risk’.
A general obligation to comply with the arm’s length principle was introduced in the UK in 1915, and is now found in TIOPA 2010 s 147. Sections 166 and 172 provide an exemption for small and medium-sized enterprises as defined in the annex to the EC recommendation 2003/361/EC.
