51Թ Practical Manual on Transfer Pricing for Developing Countries (2017)
The second edition of the 51Թ Practical Manual on Transfer Pricing for Developing Countries (TP Manual) was launched and distributed in digital format to participants on the 7th of April during the ECOSOC Special Meeting on International Cooperation in Tax Matters, in New York. A launch event for the hard copy of the Manual is expected on the occasion of the 15th Session of the Committee of Experts in International Tax Cooperation, in Geneva in mid-October 2017.
The TP Manual, in its first edition, has already been of great assistance in helping developing countries counter profit shifting, which deprives them of substantial revenues. The updated version has adopted a new format, and is divided into 4 parts for better clarity and ease of understanding:
- Part A relates to transfer pricing in a global environment;
- Part B contains guidance on design principles and policy considerations; this Part covers the substantive guidance on the arm’s length principle central to transfer pricing analysis,
- Part C addresses practical implementation of a transfer pricing regime in developing countries; and
- Part D contains country practices, similarly to Chapter 10 of the previous edition of the Manual. A new statement of Mexican country practices is included and other statements by Brazil, India, China and South Africa are updated;
Apart from the presentational changes, the TP Manual also includes, in response to comments and requests: (i) a new chapter on intra-group services; (ii) a new chapter on cost contribution arrangements; (iii) a new chapter on the treatment of intangibles; (iv) significant updating of other chapters; and (iv) an index to make the contents more easily accessible (to be included in the hard copy).
The revised TP Manual takes into consideration the outputs of the G20/OECD BEPS Project, including providing revised guidance on documentation, comparability analysis, and bringing in an additional section on commodity transactions in the Methods chapter (also known as “the sixth method” – drawn from developing country practice).
This is a timely and necessary update of the Manual, which will be of invaluable importance for developing countries wishing to adopt, implement, or further improve their transfer pricing regulations.
