22 July 2010 - The OECD approved a new Chapter IX on business restructuring that includes specific sections on:

 - Part I:   Risk profile of the related parties

 - Part II:  Valuation at the time of restructuring

 - Part III: Transfer pricing after the restructuring

 - Part IV: Disputes and re-characterization

Some of the highlights include:

The above titles explain the purpose of each section, although you will notice the OECD uses different names for Part I - IV in Chapter IX of their Transfer Pricing Guidelines.  Attached is a pdf copy of the OECD's new Chapter IX.  Click here.

MDW issued a Transfer Pricing Alert on October 20, 2008 that provided a good summary of the trends in restructuring business, key concerns and important steps to consider if your company is considering restructuring its business or has completed one in recent years.  Click here.

MDW issued a Transfer Pricing Alert on April 6, 2009 that explained the importance of this issue for Canadian taxpayers including, for example, the CRA endorsed the OECD draft on business restructuring, what an ex-CRA official said, and a Canadian taxpayer that was reassessed millions.  Click here.

2 July 2010 - The OECD is considering starting a new project to review the transfer pricing aspects of intangibles in Chapters VI and VII of the Transfer Pricing Guidelines and has asked for comments by 15 September 2010.

 

 

Caroline Siberztein, head of the OECD's transfer pricing unit, said the OECD is contemplating the tough questions regarding the recognition of intangibles.  This would go beyond accounting definitions of intangible assets and notions of protected intellectual property rights to address issues involving marketing and "soft" intangibles, such as workforce in place.

 

The OECD is willing to consider many things that are not covered by the current Transfer Pricing Guidelines including, for example, "other methods" for the valuation of intangibles.  The assessment of comparability might move away from a comparison of prices or returns towards a comparison of pricing models.

 

This is just the beginning.  Watch for more Transfer Pricing Alerts on the OECD review of the transfer pricing aspects of intangibles in the future.

 

Here is a link to the OECD's invitation on this subject.  Click here.

It is reasonable to expect that the Canada Revenue Agency, the Internal Revenue Service and all other tax authorities will need to consider what changes are needed for their transfer pricing rules and administrative guidance.  However, it is not yet known how long it might take for these changes to be introduced, what the impact will be for the taxpayer vs. tax authorities, the first year of implementation, transitional provisions, etc.

Please contact MDW Consulting Inc. if you have questions about this or other transfer pricing issues that concern you.