Another advantage provided by a safe harbour is the certainty that the taxpayer’s transfer prices will be accepted by the tax administration providing the safe harbour, provided they have met the eligibility conditions of, and complied with, the safe harbour provisions. The tax administration would accept, with limited or no scrutiny, transfer prices within the safe harbour parameters. Taxpayers could be provided with relevant parameters which would provide a transfer price deemed appropriate by the tax administration for the qualifying transaction.
TPG2017 Chapter IV paragraph 4.108
Category: E. Safe harbours, OECD Transfer Pricing Guidelines (2017), TPG2017 Chapter IV: Administrative Dispute Resolution | Tag: Safe harbour
« Prev |
Next » Related Guidelines
- TPG2022 Chapter IV paragraph 4.109A safe harbour would result in a degree of administrative simplicity for the tax administration. Although the eligibility of particular taxpayers or transactions for the safe harbour would need to be carefully evaluated, depending on the specific safe harbour provision, such evaluations would...
- TPG2022 Chapter IV paragraph 4.110The availability of safe harbours for a given category of taxpayers or transactions may have adverse consequences. These concerns stem from the fact that: The implementation of a safe harbour in a given country may lead to taxable income being reported that is...
- TPG2022 Chapter IV paragraph 4.115If the safe harbour causes taxpayers to report income above arm’s length levels, it would work to the benefit of the tax administration providing the safe harbour, as more taxable income would be reported by such domestic taxpayers. On the other hand, the...
- TPG2022 Chapter IV paragraph 4.108Another advantage provided by a safe harbour is the certainty that the taxpayer’s transfer prices will be accepted by the tax administration providing the safe harbour, provided they have met the eligibility conditions of, and complied with, the safe harbour provisions. The tax...
- TPG2022 Chapter IV paragraph 4.106Application of the arm’s length principle may require collection and analysis of data that may be difficult or costly to obtain and/or evaluate. In certain cases, such compliance burdens may be disproportionate to the size of the taxpayer, its functions performed, and the...
- TPG2022 Chapter IV paragraph 4.116In cases involving smaller taxpayers or less complex transactions, the benefits of safe harbours may outweigh the problems raised by such provisions. Provided the safe harbour is elective, taxpayers may consider that a moderate level of double taxation, if any arises because of...
- TPG2022 Chapter IV paragraph 4.113Any potential disadvantages to taxpayers from safe harbours diverging from arm’s length pricing are avoided when taxpayers have the option to either elect the safe harbour or price transactions in accordance with the arm’s length principle. With such an approach, taxpayers that believe...
- TPG2022 Chapter IV paragraph 4.114One major concern raised by a safe harbour is that it may increase the risk of double taxation. If a tax administration sets safe harbour parameters at levels either above or below arm’s length prices in order to increase reported profits in its...
- OECD releases text of the new MLC to Implement Amount A of Pillar One11 October 2023 the OECD/G20 Inclusive Framework has released the text of a new multilateral convention that updates the international tax framework to co-ordinate a reallocation of taxing rights to market jurisdictions, improve tax certainty, and remove digital service taxes. The Multilateral Convention to...
- June 2019: IRS Transfer Pricing Examination Process – Risk AssessmentThe report on Transfer Pricing Examination Process (TPEP) provides a framework and guide for transfer pricing examinations. The guide will be updated regularly by the IRS based on feedback from examiners, taxpayers, practitioners and others. ...