Strategizing Multinational Tax Risks

The OECD has released guidance on its BEPS Action Plan item 10: Transfer Pricing Guidelines re: Low Value-Adding Intra-Group Services.  Comments should be submitted by 14 January 2015.  A copy of the guidance is attached for reference:

Click to access discussion-draft-action-10-low-value-adding-intra-group-services.pdf

The Guidance, in summary:

• Defines low value-adding intra-group services
• Clarifies the meaning of duplicative activities and shareholder costs
• Provides a 2-5% range for mark-up
• Addresses cost allocation methodologies
• Discusses a simplified benefit test
• Discusses documentation to support the simplified approach

This guidance is required reading for all interested parties working with transfer pricing methodologies addressing intra-group services, noting the fact that simplification in one area of such services may introduce further complexities and ambiguities.