On April 29, 2015, OECD released a discussion draft under the BEPS (Base Erosion and Profit Shifting) project, more specifically concerning the Action 8 (Assure that transfer pricing outcomes are in line with value creation – Intangibles).
Action 8 of the BEPS Action Plan focuses on assuring that transfer pricing outcomes are in line with value creation, especially with respect of using intangibles in global operations and value chains. In this spirit, the latest discussion draft responds to the requirement to update the guidance on cost contribution arrangements (“CCAs”) found in Chapter VIII of the OECD Transfer Pricing Guidelines, and provides proposed text for an updated chapter.
According to the discussion draft, the key objective in revising the guidance is to align the transfer pricing of intangibles under CCAs with the general guidance on the transfer pricing of intangibles found in the revised Chapter VI. In particular, the clarification in the guidance to require contributions to be measured at value rather than at cost helps to ensure that outcomes for participants under a CCA should not differ significantly from the outcomes of transfers or development of intangibles for parties outside a CCA.