The OECD has released 2 new BEPS discussion drafts:
- Transfer pricing aspects of cross-border commodity transactions. Deals with work in relation to BEPS Action 10. Action 10 identifies that work needs to be undertaken to develop rules to prevent BEPS by engaging in transactions which would not, or would only very rarely, occur between third parties.
- The use of profit splits in the context of global value chains as part of the work on BEPS Action 10. The Action 10 work will involve adopting transfer pricing rules or special measures to clarify the application of transfer pricing methods, in particular profit splits, in the context of global value chains. The discussion draft uses a number of scenarios in which it may be more difficult to apply one-sided transfer pricing methods to determine outcomes that are in line with value creation, and poses questions which focus on the circumstances in which the application of a transactional profit split method may be appropriate, as well as the ways in which the factors used to split the profits can align profits and value creation.
COMMENTS on both drafts are due by 6 February 2015.
[LTN 244, 17/12/14]