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Release of discussion draft on the transfer pricing aspects of cross-border commodity transactions

06 January 2015   (0 Comments)
Posted by: Author: OECD
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Author: OECD

Public comments are invited on this discussion draft which deals with work in relation to Action 10 ("Assure that transfer pricing outcomes are in line with value creation” in relation to "other high risk transactions”) of the Action Plan on Base Erosion and Profit Shifting (BEPS).

The OECD Action Plan on Base Erosion and Profit Shifting, published in July 2013, identifies 15 actions to address BEPS in a comprehensive manner and sets deadlines to implement these actions.

Action 10 identifies that work needs to be undertaken to develop "rules to prevent BEPS by engaging in transactions which would not, or would only very rarely, occur between third parties. This will involve adopting transfer pricing rules or special measures to . . .  (iii) provide protection against common types of base eroding payments.”  In this regard, a number of countries report difficulties in relation to the pricing of cross-border commodity transactions, particularly in terms of determining adjustments to quoted prices, verifying the pricing date, and accounting for the involvement of other parties in the supply chain. These difficulties have led to the emergence of the so-called sixth method for pricing commodity transactions. The discussion draft thus contains proposals for additional guidance, and seeks further input in addressing difficulties in relation to the pricing of cross-border commodity transactions.

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