OECD – Public discussion draft on transfer pricing of financial transactions

As part of the BEPS (Base Erosion and Profit Shifting) plan, on 3 July 2018, the Organisation for Economic Co-operation and Development (OECD) published a public discussion draft on certain aspects related to the transfer pricing of financial transactions within the scope of Actions 8-10.

As explained in the press release, the consultation document aims to clarify the application of the principles contained in the 2017 edition of the OECD Transfer Pricing Guidelines regarding financial transactions. The document addresses specific transfer pricing issues associated with financial transactions between related parties - such as treasury activities, inter-company loans, cash pooling, hedging, inter-company guarantees and captive insurance – and it aims to provide a guide to the application of the concepts developed in chapter 1 of the OECD Transfer Pricing Guidelines, without preventing the various countries from implementing approaches to address issues of capital structure and interest deductibility through their national legislation.

At this stage, the consultation document includes proposals that do not yet represent the position of the OECD Committee on Fiscal Affairs. The proposals are provided solely to encourage discussion and exchanges among the experts and the various interested parties.

The consultation will end on 7 September 2018 and the OECD intends to publish the final version of the document in April 2019.

Download the Public Discussion Draft here.