Discussing transfer pricing, we should also notice the Organization for Economic Cooperation and Development (OECD). OECD is an international organization activities of which are aimed at the establishment of the free market economy principles. As of today it comprises 37 countries, most of which are members of European Union.

In this article, I have prepared the information regarding OECD recommendations on transfer pricing. Is it interesting for you? Ok, let's read.

What is OECD?

The Organization for Economic Cooperation and Development is the special meeting in which take part governments of participating countries in order to resolve issues related to fight against various aspects of globalization. In addition, OECD provides certain
recommendations for countries in order to improve transfer pricing activities.

OECD Guidelines on Transfer Pricing

OECD published materials contains the various statistical information, comparative data, as well as conventions, standards and guidelines. Particular attention should be paid to standards and guidelines, as it is a legal act that contains recommendations for participation countries regarding the application of "arm's length" principle for controlled transactions.

Global economy requires special control over the implementation of transfer pricing. Control tax authorities try their best to ensure that taxable income is not deliberately withdrawn from their jurisdiction, and taxpayers, in turn, do not avoid submission of reports. In addition, taxpayers also would like to reach the common agreement on "arm's length" principle, because in case of disputes between two resident countries, taxpayers have to apply double taxation. That is why general recommendations have been developed regarding the mentioned above principle that makes it possible to balance economic relations between OECD member countries.

One of the most common questions is when and how this document appeared. OECD Transfer Pricing Guidelines is one of OECD Reports, namely Transfer Pricing and Multinational Companies, which was prepared in 1979. This Report was modified in a certain way and prepared in the form of Guidelines.

Legal act was officially approved in 1995: on June 27 by Committee on Fiscal Affairs and on July 13 by Council of Organization for Economic Cooperation and Development. Since then, recommendations were updated more than once and added by new norms. However, the essence remains the same.

One of the latest changes was inserted in 2010. Later, most of Sections I, II and III were revised, namely, were added new provisions that today regulate choice of the most effective transfer pricing method, practical application and implementation of comparability analysis. In 2010, was prepared new Section. Its essence is in the regulation of norms that reflect transfer pricing factors for the restructuring of the company. Accordingly, all other sections of Guidelines were amended or added in such way that all standards correspond to mentioned above innovations.

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