This content is from: Transfer Pricing

Taxpayers’ concern about commercial sensitivity discussed at OECD public consultation on transfer pricing

Commercial sensitivity has been the focus of the morning’s discussion at the OECD’s Public Consultation on Transfer Pricing Documentation and Country-by-Country Reporting (CbCR).

Taxpayers around the table are concerned that unnecessary information will be demanded that could then be misused and made public to competitors.

The BEPS documentation requirement generating the most concern is the master file, which taxpayers feel asks for unnecessary and irrelevant information such as number of employees, business models and profit splits.

 “The information from each MNC will not be identical and therefore can be construed differently,” said Catherine Schultz of the National Foreign Trade Council. “This could result in the information provided being looked at negatively.” Eurodad, a non-government organisation for developing countries, stressed the need to define commercial sensitivity and to ensure that there is no confusion being made with trade secrets.

“We can’t keep the public in the dark. The information being presented is in the public interest,” The Eurodad spokeswoman said. She added that there is too much emphasis on confidentiality, which is facilitating tax evasion in developing countries.

While much was said about the topic of commercial sensitivity it is clear that it will be some time before the OECD can expect unanimous approval.

Differences were emphasised between something that is commercially sensitive and data that is confidential.

The Eurodad spokeswoman said that profit shifting in general is commercially sensitive but this information is usually in the public interest and should not be confused when defining what would be commercially confidential in any CbCR guidelines.

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