Transfer pricing amendments
Over the last few years, there have been significant OECD developments as a result of its global Base Erosion Profit Shifting (‘BEPS’) initiative, including revisions to certain chapters of the OECD Transfer Pricing Guidelines. The report Aligning Transfer Pricing Outcomes (released on 5 October 2015) contains such revisions to chapters of the 2010 OECD Transfer Pricing Guidelines. The revised OECD Transfer Pricing Guidelines enhance guidance on intellectual property, hard-to-value intangibles, and seek to align transfer pricing outcomes with economic substance and value creation.
The Government has now announced that it will adopt the revised OECD Transfer Pricing Guidance into Australia’s transfer pricing law, ensuring the rules are current and in line with international best practice.
Adopting the revised OECD Transfer Pricing Guidelines into the Australian transfer pricing law provides the Government with greater ability to address key transfer pricing concerns arising from the application of BEPS action items, and helps ensure that Australian profits are taxed appropriately in Australia.
In particular, entities that have significant transactions involving intangible assets should review their current transfer pricing arrangements, and ensure that they remain appropriate in light of the changes to the OECD Guidelines.