No Viable Alternative for Measuring Cross-Border Intercompany Transfer Prices, Says Head of OECD Transfer Pricing.

October 30, 2009

ARLINGTON, Va., Oct. 30 /PRNewswire-USNewswire/ -- Despite the mismatch between the behavior of global multinational companies and the single-entity approach required by the international arm's-length standard, no alternative exists to measure cross-border intercompany transfer prices for tax purposes that would be simpler to administer, provide more certainty, and have broad political support, according to Caroline Silberztein, head of the Organization for Economic Cooperation and Development's transfer pricing unit.

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In an interview with BNA Tax Management Transfer Pricing Report editor Kevin Bell, Silberztein acknowledged the challenges of applying the arm's-length principle in the current economy, where an increasing number of intercompany transactions have no counterpart between unrelated parties. While noting that questions arise about how to account for group synergies, whether the commercial rationality of transactions should be assessed at the group or entity level, and other matters, Silberztein emphasized that no viable alternative exists to the approach.

"The arm's-length principle has enough good aspects in it for us to make the efforts needed to develop guidance that works well in an era of globalization," she said.

In the interview, Silberztein also discussed the OECD's recent draft on business restructuring, including the debate over the meaning of "commercially rational," and the OECD drafts on comparability and profit methods. In addition, she expressed support for simultaneous tax examinations in transfer pricing, saying all of the ingredients for increased use of the procedure -- including improved cooperation between tax administrations--are present today.

The entire interview, in Q&A form, and other articles from the 9/24 issue may be accessed by signing up for a free trial of BNA Tax Management Transfer Pricing Report at: http://bnatax.com/tm/tmwebleadform.htm

For information on BNA Tax & Accounting's Transfer Pricing Library and other Portfolios in this series, go to www.bnatax.com.

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SOURCE BNA Tax & Accounting