On February 11, 2020, the OECD released a report entitled Transfer Pricing Guidance on Financial Transactions: Inclusive Framework on BEPS: Actions 4, 8-10.
In October 2015, as part of the final BEPS package, the OECD published the reports on Action 4 (Limiting Base Erosion Involving Interest Deductions And Other Financial Payments) and Actions 8-10 (Aligning Transfer Pricing Outcomes with Value Creation).
Those reports mandated follow-up work on the transfer pricing aspects of financial transactions.
This is the first time that the OECD Transfer Pricing Guidelines include guidance on the transfer pricing aspects of financial transactions, the OECD noted.
According to the OECD, the guidance will contribute to consistency in the interpretation of the arm’s length principle and help avoid transfer pricing disputes and double taxation.
The guidance also includes a number of examples to illustrate the principles discussed in the report.