The participants at the consultation included 35 representatives from the business community and over 50 officials from OECD member countries.
Participants discussed a broad range of issues relating to the comparability analysis, the selection of the most appropriate transfer pricing method to the circumstances of a case and the practical application of transactional profit methods.
“We feel strongly that that the work of the OECD in this area will be even more important in the years to come, when trade barriers continue to fall and transfer pricing becomes a topic for all governments to deal with. Consistency of approaches by governments is essential,” said Charles Triplett from the Business and Industry Advisory Committee to the OECD.
The consultation discussed transfer pricing procedures in detail.
“During these two days we had a very constructive dialogue about what the practical implementation of the arm’s length principle, of the comparability standard and of the rules for selecting and applying a transfer pricing method mean for taxpayers and tax administrations,” said Marlies de Ruiter, the chair of working party number six, the body responsible for transfer pricing guidelines.
“The finalisation of the guidance will require a delicate balance between a theoretically sound framework and workable guidance on application. The working party will continue the discussion of these issues as soon as tomorrow, with the business comments in mind, and work towards a draft revision of the relevant guidance from the transfer pricing guidelines,” she added.
Other attendees saw great value in the meeting.
“Based on the consultation, I believe the purpose was to delve deeper into the previous discussions on comparability and transactional profit methods” said Jennifer Rhee, a tax partner at RSM Richter in Canada. “One of the main issues is that we have to move from a theory of the arm’s length approach into a practical use of it. Transfer pricing is not an exact science, there is not just one set of comparables. We have to inject reasonableness into transfer pricing.”
The working party delegates remained at the consultation after the business commentators left to discuss the comments raised. It is hoped that there will be further consultation soon.
“The working party delegates took into account all of the comments made and practitioners were grateful to have the opportunity to put their views across,” said Rhee.
