October 2020 - Final OECD transfer pricing guidelines on financial transactions (part II: treasury functions)

The Organization for Economic Co-operation and Development (OECD) has released in February 2020 the final Transfer Pricing Guidance on Financial Transactions (“Guidance”). The Guidance provides an insight on the arm’s length treatment of various financial transactions among related parties.

The Guidance has been published as a follow up guidance in relation to Base Erosion and Profit Shifting (“BEPS”) Action 4 and Actions 8-10. Sections A-E of the Guidance will be added as a new Chapter X of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“OECD TPG”), whereas the guidance on the determination of risk-free and risk-adjusted rates of return (Section F) will be included in Chapter I of the OECD TPG. This is the first time that multinational enterprise (MNE) groups are provided with guidelines on how to structure and price intra-group financial transactions.

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