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OECD paper on transfer pricing comparability data and developing countries
Further to the publication of the OECD’s invitation for public comments on the OECD paper on transfer pricing comparability data and developing countries, Taxand is honoured to provide written comments based on practical experience as tax advisors, and TP specialists.
The OECD was requested by the G8 at its Lough Erne summit “to find ways to address the concerns expressed by developing countries on the quality and availability of the information on comparable transactions that is needed to administer transfer pricing effectively.” The OECD paper, which has been prepared by the OECD Secretariat in conjunction with the Task Force on Tax and Development, sets out and briefly discusses 4 possible approaches to addressing the concerns over the lack of data on comparables that have been expressed by developing countries.
Comparable data availability is a key issue and an actual concern for multinationals as there is an ever increasing trend for such corporations to expand into developing countries, due to their advantageous markets, characterised by high growth potential and low market capitalisation. Local tax authorities are conflicted between presenting a favourable climate for investors, which includes multinational corporations, and the monetary and budgetary constraints of their jurisdiction.
Taxand would like to thank the OECD Committee on Fiscal Affairs, country delegates and other participants for the opportunity to provide some general comments on transfer pricing issues faced by multinationals active in developing countries and for the proposed approach to addressing some tax challenges of the emerging economies. Our response to the issues outlined in the OECD paper on transfer pricing comparability data and developing countries is provided below.
Also published in Thomson Reuters' Taxnet Pro, 24 April 2015
Our response deals with practical suggestions for improving comparability analyses in developing countries and reducing the complexity of such operations for multinationals. We appreciate this opportunity to provide comments to the OECD Committee of Fiscal Affairs and would be pleased to discuss this further and to participate in any further discussion on these matters.