International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Wednesday, July 6, 2016

OECD releases revised guidance on profit splits

The Final Report on Actions 8-10 of the BEPS Action Plan ("Assure that transfer pricing outcomes are in line with value creation") sets out the scope of the work mandated under Action 10 of the BEPS Action Plan in relation to the application of transfer pricing methods.

The discussion draft, which does not yet represent a consensus position of the Committee on Fiscal Affairs or its subsidiary bodies, aims at clarifying and strengthening the guidance on Logooecd_en the transactional profits split method in the context of global value chains. In particular, it elaborates on two different approaches to splitting profits: transactional profit splits of actual profits and transactional profit splits of anticipated profits. It also proposes further draft guidance on the appropriate application of transactional profit split methods.

Commentators are encouraged to respond to the questions included in the discussion draft, as well as the direction of the draft more generally. Examples of scenarios in which a transactional profit split is found to be the most appropriate transfer pricing method are also invited.  Interested parties are invited to send comments on these discussion drafts by 5 September 2016 by e-mail to in Word format. Comments in excess of ten pages should attach an executive summary limited to two pages.

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