The Organisation for Economic Co-operation and Development (OECD
) on Jan. 20 released new transfer pricing guidelines (the “OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration 2022”) that provide key information on the application of the “arm’s-length principle,” which represents the international consensus on the valuation of cross-border transactions between associated enterprises for income purposes.
The updated guidelines provide additional clarity on several important transfer pricing issues—including determining whether the profit-split method is appropriate, and guidance for tax administrators regarding hard-to-value intangibles.
The 2022 edition of the guidelines also consolidates three reports that modified the previous 2017 edition of the guidelines:
- The 2018 report on revised guidance on the transactional profit split method
- The 2018 report on guidance for tax administrations on the application of the approach to hard-to-value intangibles
- The 2020 report on transfer pricing guidance on financial transactions.
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