Transfer Pricing and Financial Transactions

S. 961. Introduction

On 11 February 2020, the OECD issued the final version of the Transfer Pricing Guidance on Financial Transactions (OECD FT Guidance). It is part of Actions 8–10 of the BEPS Project and reflects the comments received in response to the non-consensus public discussion draft released on 3 July 2018. The OECD FT Guidance updates Chapter I of the OECD Transfer Pricing Guidelines (OECD TPG) and introduces a new Chapter X that is dedicated to financial transactions.

All OECD member countries broadly follow the transfer pricing principles as established within the OECD TPG. Therefore, the recommendations prescribed by the OECD FT Guidance could be used by the tax authorities of OECD member countries in the context of assessing the arm’s length nature of financial transactions. In addition, although local rules and practices in relation to financial transactions may vary, the OECD FT Guidance could be particularly prominent for discussions in the context of mutual agreement procedures and arbitration since these are typically governed by OECD principles.

Ultimately, the purpose of the OECD FT Guidance is to provide taxpayers and tax authorities with a consistent framework for a...