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BEPS Project - Recent Developments


​Published on August 10, 2017


The recent G20 meeting in Hamburg presented an opportunity for the OECD to report on the status quo of the BEPS Project. The recent and most relevant aspects from a Transfer Pricing perspective are, amongst others, the signing of the BEPS multilateral instrument (”MLI”), the implementation of the Country-by-Country Reporting (”CbCR”) standards as well as the publication of the (modified) draft versions of the guidelines on profit splits, hard-to-value-intangibles (”HTVI”) and attribution of profits to permanent establishments (”PE”).

Multilateral Instrument

Action 15 of the BEPS Project, the development of a multilateral instrument involving more than 100 countries and jurisdictions, represents a milestone in the field of international tax collaboration. It allows to update bilateral tax treaties in a synchronized way and therefore represents a swift tool for addressing issues that show a broad consensus for the need for coordinated action. As the MLI is ”sitting on top” of existing bilateral treaties, it will provide a very efficient way of modifying existing tax treaties. Rather than implementing the BEPS changes by amending multiple bilateral tax treaties, countries can opt to sign the MLI once to change many tax treaties at the same time.

Subsequent to the signing ceremony, which was held in Paris on June 7th, the OECD developed the MLI database that will assist in determining whether an in-force tax treaty between countries has been modified by the countries’ later decision to sign and ratify the MLI. It is further possible to download useful information such as a step-by-step-guidance on the functioning of the MLI from the OECD’s homepage.


The CbCR is at the forefront of the concrete measures directly and immediately affecting tax payers around the globe and will provide tax administrations with extended risk assessment capacities - particularly when used in conjunction with other information such as Master File and Local File, the remaining two components of the three-tiered documentation package agreed under BEPS Action 13. To date already more than 7,000 exchange relationships between jurisdictions have been established through the signing of the MLI by 64 countries.

The OECD did provide a publicly available list which is regularly updated and includes information on the current implementation status of the legislation regarding the particularities of CbCR for the single countries. Furthermore, at the beginning of July, additional guidance on the filing of the CbCR was published.

Revised Draft Guidelines on HTVI, Profit Splits and Attribution of Profits to PE’s

The previously published drafts on profit splits and on the attribution of profits to permanent establishments led to different views and vivid discussions amongst the stakeholders of the inclusive framework. The same is valid for the HTVI issues in BEPS Action 8. Consequently, revised discussion drafts on transactional profit splits, the attribution of profits to permanent establishments and HTVI’s were released by the OECD.

The revised draft on transactional profit splits intends to clarify the application of the transactional profit split method by identifying possible circumstances and indicators for its use as most appropriate transfer pricing method as well as by providing further guidance regarding the determination of the profits to be split.

Regarding the revised draft on the attribution of profits to permanent establishments, the OECD states that the most important change consists in the shift away from the merely numerical and prescriptive example-based approach from the previous draft towards a more high-level view that outlines the general principles to govern the attribution of profits to permanent establishments.

Action 8 of the BEPS Action Plan mandated the development of transfer pricing rules on special measures for transfers of HTVI aimed at preventing base erosion and profit shifting by moving intangibles among group members. The newly published discussion draft presents the principles that should underlie the implementation of the HTVI approach. A number of examples are included to clarify the implementation of the HTVI approach in different scenarios. Additionally a final section explaining the interaction between the HTVI approach and the access to the mutual agreement procedure under the applicable treaty is included.

Finally, the OECD has published an updated version of the 1995/2010 OECD Transfer Pricing Guidelines, covering amongst others, the changes resulting from BEPS Actions 8-10 ”Aligning Transfer pricing Outcomes with Value Creation” and Action 13 ”Transfer Pricing Documentation and Country-by-Country Reporting”.

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