Among other new compliance obligations, such companies will be compelled to issue detailed country-by-country (CbC) reports on their operations within individual tax jurisdictions, to be made available to the relevant tax administrations." Potential for problemsĪs the number of OECD member states signing up to the new recommendations has grown exponentially, industry experts such as Luis Carrillo are increasingly worried about the potential for misinterpretation of the information in the proposed CbC reports, and about the increase in transfer pricing risk that BEPS represents for multinationals - especially those operating in emerging markets. As part of its 'Base Erosion Profit Shifting Project' (BEPS) report, the international body called on multinationals to tighten their documentation standards across the board. In October this year, acting in response to concerns that multinational enterprises continue to actively use transfer pricing as a profit-shifting and tax avoidance mechanism, G20 finance ministers meeting in Lima endorsed a new set of OECD-issued guidelines. These were, in large part, implemented within the individual tax codes of member states and, since then, a large degree of regulatory uniformity has existed among the world's advanced economies. To help determine what constitutes an arm's-length price in a transfer pricing context, the Organisation for Economic Cooperation and Development (OECD) issued a set of recommendations in its 'Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations' (the OECD Guidelines) in the mid-1990s. The guiding principle in transfer pricing for tax authorities and multinational enterprises alike is the "arm's-length principle": namely, that related entities (belonging to the same corporate group) should transact with one another as if they were unrelated third parties. Given the potential for use as a mechanism to shift profits and alter the amount of taxes owed, transfer pricing has become a topic of focus for tax administrations globally.
Transfer pricing is the price related parties belonging to the same corporate group pay one another for goods and services.
#Orbis bureau van dijk price software
Chief Executive Officer talks to Luis Carrillo, director of transfer pricing solutions at Bureau van Dijk, about how the company's published databases and software solutions can streamline the compliance process for the benefit of multinationals. As world governments begin to implement the recommendations contained within the Organisation for Economic Cooperation and Development's 'Base Erosion Profit Shifting' report on transfer pricing, the race is on among multinationals to brace for the increase in transfer pricing risk and compliance burden.
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