OECD Transfer Pricing Rules Undercut Developing Country Benefits

An OECD framework meant to simplify transfer pricing for some business transactions may take the teeth out of its benefit for so-called low-capacity jurisdictions, according to tax specialists.

The optional framework, known as Amount B, was detailed in a February OECD report as a way to help low-capacity jurisdictions simplify the valuation of wholesale marketing and distribution transactions between related entities. These countries, the OECD explains, often lack the data and administrative resources to determine the revenue companies owe from such transfer pricing.

The Organization for Economic Cooperation and Development’s framework also included a political agreement to respect these countries’ ...