UK and International Tax news

OECD Releases BEPS Discussion Draft On Transactional Profit Splits

Tuesday 27th June 2017

The OECD has recently issued a BEPS discussion draft on the transactional profit split method in the context of global value chains.

BEPS Action 10 invited clarification of the application of transfer pricing methods, in particular the transactional profit split method and the latest discussion draft replaces the earlier July 2016 discussion draft released for public comment and builds on the existing guidance in the OECD Transfer Pricing Guidelines, as well as comments received on the July 2016 discussion draft.

The draft is intended to clarify the application of the transactional profit split method, in particular, by identifying indicators for its use as the most appropriate transfer pricing method, and providing additional guidance on determining the profits to be split. The revised draft also includes a number of examples illustrating these principles.

Comments are invited on any aspect of the revised draft by 15 September 2017, in particular on a number of issues relating to the application of the profit split method.

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