On 3 July 2018, the OECD released a discussion draft on financial transactions, which deals with follow-up work in relation to Actions 8-10 (“Assure that transfer pricing outcomes are in line with value creation“) of the BEPS Action Plan.
The 2015 report on BEPS Actions 8-10 mandated follow-up work on the transfer pricing aspects of financial transactions. Under that mandate, the discussion draft, aims to clarify the application of the principles included in the 2017 edition of the OECD Transfer Pricing Guidelines – particularly: financial transactions and the ‘accurate delineation analysis’ (Chapter 1). The work also addresses specific issues related to the pricing of financial transactions such as treasury function, intra-group loans, cash pooling, hedging, guarantees and captive insurance. The discussion draft, does not, as yet, represent a consensus position of the Committee on Fiscal Affairs or its subsidiary bodies.
Comments are sought by 7 September 2018. While comments are invited on any aspect of the discussion draft, it identifies a number of issues on which feedback is particularly sought.
[OECD website: Media Release; LTN 126, 4/7/18; Tax Month – July 2018]
Comprehension questions (answers available)
- Is the discussion draft about transfer pricing consideration for financial transactions?
- Does it address specific issues, related to the pricing of financial transactions, such as treasury function, intra-group loans, cash pooling, hedging, guarantees and captive insurance
