The Organisation for Economic Cooperation and Development (OECD) has announced a four-week consultation on an interim draft paper on transfer pricing comparability data in the context of developing countries
The paper considers transfer pricing in the context of developing countries and was issued in response to a G8 request following the Lough Erne summit last year. It is designed ‘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 G8 recognise that it is often, in practice, difficult for some developing countries to obtain adequate information to apply the arm’s length principle as they tend to have fewer organised players in any given sector compared to developed countries.
In addition, comparable information may be incomplete in developing countries and in a form which is difficult to analyse as the resources and processes are not available. There is also a lack of comparables in emerging economies.
The four possible approaches include expanding access to data sources for comparables; more effective use of data sources for comparables; approaches to identifying arm’s length prices or results without reliance on direct comparables; and advance pricing agreements and mutual agreement proceedings.
The paper points out that given the broad range of possible actions, further prioritisation based on country needs and resource availability will be necessary.
The draft paper has been released ahead of the Global Forum on Transfer Pricing meeting to be held 26 to 28 March 2014.
The closing date for comment is 11 April 2014.
The interim draft paper is available at http://www.oecd.org/ctp/transfer-pricing/transfer-pricing-comparability-data-developing-countries.pdf