OECD BEPS Action 10: TP Low Value Add Services
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.
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