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OECD discussion draft on Action 10 (use of profit splits in the context of global value chains)
On 16 December 2014, the OECD published a discussion draft on Action 10 (use of profit splits in the context of global value chains) of the BEPS Action Plan. The Action Plan recognises that the actions to counter BEPS must be complemented with actions that ensure certainty and predictability for business. Taxand is honoured to provide combined feedback from around the world on the OECD discussion draft with respect to Action 10 of the BEPS Action Plan.
Action 10 of the BEPS Action Plan identifies that work needs to be undertaken to develop “rules to prevent BEPS by engaging in transactions which would not, or would only very rarely, occur between third parties. This will involve adopting transfer pricing rules or special measures to ... clarify the application of transfer pricing methods, in particular profit splits, in the context of global value chains.”
Taxand agrees that revisions to the guidance on the use of the transactional profit split method in Chapter II of the OECD Transfer Pricing Guidelines is required and has provided written comments to assist the OECD in their work on Action 4 based the practical experience we have as tax advisors and transfer pricing specialists.
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