Transfer pricing

Release of discussion draft on the use of profit splits in the context of global value chains as part of the work on BEPS Action 10


16/12/2014 – Public comments are invited on this discussion draft which deals with work in relation to Action 10 of the OECD 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 ...  clarify the application of transfer pricing methods, in particular profit splits, in the context of global value chains.”  Further, the report on Addressing the tax challenges of the digital economy has noted in particular that the work should devote attention to the consequences of greater integration in multinational enterprises, and should evaluate the need for increased reliance on value chain analyses and profit split methods.


The discussion draft uses a number of scenarios in which it may be more difficult to apply one-sided transfer pricing methods to determine outcomes that are in line with value creation, and poses questions which focus on the circumstances in which the application of a transactional profit split method may be appropriate, as well as the ways in which the factors used to split the profits can align profits and value creation. Responses to these questions will be taken into account in considering revisions to the guidance on the use of the transactional profit split method in Chapter II of the OECD Transfer Pricing Guidelines.


Interested parties are invited to submit written comments by 6 February 2015 (no extension will be granted). Comments should be sent by email to in Word format (in order to facilitate their distribution to government officials) and should be addressed to Andrew Hickman, Head of Transfer Pricing Unit, Centre for Tax Policy and Administration.


Please note that all comments received regarding this discussion draft will be made publicly available. Comments submitted in the name of a collective “grouping” or “coalition”, or by any person submitting comments on behalf of another person or group of persons, should identify all enterprises or individuals who are members of that collective, or the person(s) on whose behalf the commentator(s) are acting.


Public consultation meeting

A public consultation on the discussion draft and other topics will be held on 19-20 March 2015 at the OECD Conference Centre in Paris. Registration details for the public consultation will be published on the OECD website in due course. Speakers and other participants at the public consultation will be selected from among those providing timely written comments on the discussion draft.