terça-feira, agosto 05, 2008

OECD says transfer pricing guidelines should be applied to permanent establishments

The OECD's transfer pricing guidelines for application to separate but associated enterprises should apply in the attribution of profits to permanent establishments (PEs), said a report by the organisation.
The report, approved by the OECD Council on July 17, said the profits of a PE should be determined by applying by analogy the OECD's transfer pricing guidelines' arm's-length principle, including its comparability analysis, to dealings between the PE and the rest of the enterprise to which it belongs and by pricing in accordance with the guidelines any transactions with associated enterprises attributed to the PE.
The OECD's committee on fiscal affairs will adopt the report in two stages to provide tax administrations and taxpayers with maximum certainty as to how profits should be attributed to PEs under both existing and future treaties.
The organisation has begun work on a new version of article 7 of its
Model Tax Convention on Income and Capital - the principles for attributing profits to a PE - which will reflect the conclusions of the report. The revised article 7 will appear in the next update to the Model Tax Convention and will be used in the negotiation of new treaties and in amendments to existing treaties.


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