February 2021 - OECD Guidance on transfer pricing implications of COVID-19
On 18 December 2020, the OECD published Guidance on the transfer pricing implications of the COVID-19 pandemic (“OECD Guidance”) providing guidance to taxpayers when applying the arm’s length principle and applying the OECD 2017 Transfer Pricing Guidelines (“TPG”) for periods impacted by the COVID-19 pandemic.
The OECD Guidance is divided into four sections to highlight challenges that multinational enterprises (“MNE”) may encounter in complying with transfer pricing regulations as a result of COVID-19. COVID-19 may also trigger the need for intragroup debt. This OECD Guidance however does not deal with the transfer pricing of financial transactions, which was covered by another guidance issued by the OECD in February, 2020. Please refer to our Tax Commentaries issued in September and October 2020.
The OECD Guidance includes the following four sections:
1. Comparability analysis;
2. Losses and the allocation of COVID-19 specific costs;
3. Government assistance programs; and
4. Advance pricing agreements.
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