TPguidelines

This section provides specific guidance relating to a particular category of intra-group services referred to as low value-adding intra-group services. Section D. 1 contains the definition of low value-adding intra-group services. Section D.2 sets out an elective, simplified approach for the determination of arm’s length charges for low value-adding intra-group services, including a simplified benefits test. Section D.3 contains guidance on documentation and reporting requirements that should be met by an MNE group electing to apply this simplified approach. Finally, Section D.4 addresses some issues with regard to the levying of withholding taxes on charges for low value-adding intra-group services. In summary, the simplified approach recognises that the arm’s length price for low value-adding intra-group services is closely related to costs, allocates the costs of providing each category of such services to those group companies which benefit from using those services, and then applies the same mark-up to all categories of services. MNE groups not electing to apply the simplified approach set out in this section should address transfer pricing issues related to low-value-adding services under the provisions of Sections A and B, above.