OECD Advises Multinationals On Financial Transaction Pricing

Law360 (February 11, 2020, 8:06 PM EST) -- The Organization for Economic Cooperation and Development issued its first-ever guidelines Tuesday for the proper pricing of financial transactions between branches of a multinational corporation, to deter tax avoidance and prevent instances of double taxation.

In a report covering several actions under its project against tax base erosion and profit shifting by multinationals, the OECD said it was offering guidance to extend the arm’s-length principle to intragroup loans, hedging, captive insurance and other financial dealings. The principle holds that a multinational and its subsidiaries should price their internal transactions the same way unrelated companies would, as though at arm’s-length.

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