THE COUNCIL,

HAVING REGARD to Article 5(b) of the Convention on the Organisation for Economic Co-operation and Development of 14th December, 1960;

HAVING REGARD to the Declaration on International Investment and Multinational Enterprises and the Guidelines annexed thereto [C(76)99(Final)];

HAVING REGARD to the Declaration on Base Erosion and Profit Shifting (“BEPS”) [C/MIN(2013)22/FINAL] and to the BEPS Explanatory Statement and the measures set out in the BEPS Final Reports (the BEPS package), endorsed by the Council on 1 October 2015 [C(2015)125/REV1] and the G20 Leaders at the Antalya Summit on 15-16 November 2015;

HAVING REGARD to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, hereafter referred to as “Guidelines” as they may be modified by the Committee on Fiscal Affairs;

HAVING REGARD to the Recommendation of the Council on Base Erosion and Profit Shifting Measures Related to Transfer Pricing [C(2016)79] which recommends that Members and non-Members having adhered to it follow the guidance set out in the 2015 BEPS Reports on Actions 8-10 “Aligning Transfer Pricing Outcomes With Value Creation” [C(2015)125/ ADD8] and on Action 13 “Transfer Pricing Documentation and Country-by-Country Reporting” [C(2015)125/ADD11] as incorporated in the Guidelines;

HAVING REGARD to the establishment of the Inclusive Framework on Base Erosion and Profit Shifting as agreed by the Committee on Fiscal Affairs [CTPA/CFA/NOE2(2016)1/REV3], reported to the Council [C/M(2016)3], and endorsed by the G20 Finance Ministers at their 26-27 February 2016 meeting in Shanghai, China, under which over 100 countries and jurisdictions have been invited to participate as members [C(2016)78], i.e. on an equal footing with OECD Members on the basis of the same commitments as OECD Members and existing Associates with regard to the BEPS Project;

CONSIDERING the fundamental need for co-operation among tax administrations to remove the obstacles that international double taxation presents to the free movement of goods, services and capital between jurisdictions;

CONSIDERING the equally fundamental need to effectively prevent double non-taxation as well as no or low taxation resulting from the misapplication of the international standards for transfer pricing rules leading to outcomes in which the allocation of profits is not aligned with the economic activity that produced the profits;

CONSIDERING that transactions between associated enterprises may take place under conditions differing from those taking place between independent enterprises;

CONSIDERING that the prices of such transactions between associated enterprises (usually referred to as transfer pricing) should, nevertheless, for tax purposes be in conformity with those which would be charged between independent enterprises (usually referred to as arm’s length pricing) consistent with Article 9 (paragraph 1) of the OECD Model Tax Convention on Income and on Capital;

CONSIDERING that problems with regard to transfer pricing in international transactions assume special importance in view of the substantial volume of such transactions;

CONSIDERING the need to achieve consistency in the approaches of tax administrations, on the one hand, and of associated enterprises, on the other hand, in the determination of the income and expenses of a company that is part of a Multinational Enterprise Group that should be taken into account within a jurisdiction.

OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations

In a global economy where multinational enterprises (MNEs) play a prominent role, governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein. For taxpayers, it is essential to limit the risks of economic double taxation. The OECD Transfer Pricing Guidelines provide guidance on the application of the “arm’s length principle”, which is the international consensus on the valuation of cross‑border transactions between associated enterprises.

This January 2022 edition includes the revised guidance on the application of the transactional profit method and the guidance for tax administrations on the application of the approach

to hard‑to‑value intangibles agreed in 2018, as well as the new transfer pricing guidance on financial transactions approved in 2020. Finally, consistency changes have been made to the rest of the OECD Transfer Pricing Guidelines. The OECD Transfer Pricing Guidelines were approved by the OECD Council in their original version in 1995.