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BDO submissions to the OECD


BDO actively participates in the work being done by the OECD with respect to transfer pricing and international tax.  We believe it is essential that we provide the OECD with our commentary on its Discussion Drafts and White Papers, and to attend meetings and webcasts with the OECD, in order to ensure that an environment is developed that will help international businesses thrive and effectively manage their tax expenditures while allowing tax authorities to collect the tax revenues required to fuel their respective economies.  Included, below, are links to some of the Submissions BDO has sent to the OECD in conjunction with the work being done on Base Erosion and Profit Shifting as well as taxation of the digital economy.

Public consultation on the reports on the Pillar One and Pillar Two blueprints


Public consultation on review of country by country reporting (BEPS Action 13) 



Public consultation on the GloBE proposal - Pillar Two

Public consultation on a unified approach under Pillar One

Discussion draft on financial transactions

Discussion draft on revised guidance on profit splits

Discussion draft on additional guidance on the attribution of profits to permanent establishments

Discussion draft on implementation guidance on hard-to-value intangibles

BDO has called for a number of amendments to the guidance to help reduce the uncertainty experienced by taxpayers when they have transferred a hard-to-value intangible.  We have requested specific guidance on the time frame within which a tax authority can challenge the methodology for valuing the asset, together with guidance to help tax authorities identify transactions potentially within the regime at an early stage.  More guidance is sought on how to assess the reasonableness of a taxpayer’s assumptions and also how to ensure the Mutual Agreement Procedure operates effectively to avoid double taxation.

​Discussion draft on revised guidance on profit splits

BDO believes additional guidance on the application of profit split methods is useful and will be helpful where other methods do not appropriately reflect the integrated nature of the functions, assets, and shared risks arising in highly complex multinational businesses today.   The increasingly interdependent nature of the value drivers and core business activities of multinational enterprises means that it becomes more likely that the transactional profit split will become a more common method applied in resolving transfer pricing disputes.  Therefore, providing parameters and practical guidance is critical for MNEs to prepare an appropriate level of supporting analysis when applying the transactional profit split as well as achieve as much consistency as possible when Tax Authorities are reviewing such analysis.

Interest de​​ductions and other financial payments

​Based on BDO’s review of the proposed guidance, we suggested to the OECD that parts of the Discussion Draft could be improved through greater clarity and consideration of established rules already in place in many jurisdictions.  BDO  included suggestions to select topics highlighted in this Discussion Draft that we believe could help refine the proposed guidance. Our focus was to offer practical suggestions that limit the risk of double taxation while maintaining practical solutions to taxpayers.

Use of profit splits in the context of global value chains​

​BDO believes that additional guidance on the application of profit split methods in the context of global value chain functions would be helpful in addressing situations where other methods may not be immediately appropriate.  BDO recognizes that a profit split is a useful tool that can increase transparency, certainty, and robustness. It is also important to weigh the practicalities and administrative costs for businesses in implementing transactional profit split methods. BDO presented responses and comments to questions raised by the OECD under various sections and scenarios set out in the Discussion Draft.

Revisions to Chapter I of the OECD Transfer Pricing Guidelines

​We believe that the Discussion Draft does not represent a significant departure from the historic intentions of the Guidelines, but rather reaffirms and emphasizes expectations. Overall, this should be helpful as it sets out clear expectations for both MNEs and tax authorities. However, by increasing emphasis on certain areas and by making the concept of non-recognition more explicit outside of the context of recharacterization in Chapter IX, there is a risk that this will increase the expectations for documentation and tax authority challenge across the board rather than simply focusing on the higher risk, hard to characterize or potentially inappropriate transactions which we understand are the OECD’s main concern. The OECD might usefully consider increasing the level of practical guidance around how the new level of proposed scrutiny is implemented, placing this in the context of their Risk Assessment Handbook and their other recent moves towards simplification in certain areas.

Revised discussion draft on transfer pricing aspects of intangibles

BDO suggested further refinements to the guidance outlined in the Discussion Draft, particularly with respect to: the movement of personnel within an MNE; whether “know how” was being over-used as being a distinct intangible; ensuring that the OECD’s guidance was aligned with existing and accepted tax and legal principles; the ownership of intangibles; the use of rules of thumb; potential increased reliance on profit split methods; the selection of appropriate transfer pricing methodologies; and, the accuracy of financial projections used in valuations for intangibles.

White paper on transfer pricing documentation

BDO confirmed our support of the OECD’s efforts to put in place a transfer pricing documentation framework that is both effective for tax authorities’ risk assessment and practical for businesses. We suggested further guidance and clarity would be beneficial to ensure that the balance of transparency and practicality is achieved in practice and that requirements do not become weighted by default to the tax authority with the most onerous regulation and practice.​

Draft handbook on transfer pricing risk assessment

​BDO confirmed our support of the OECD’s efforts to set out a clear and consistent framework for the management of transfer pricing risk by both business and taxing authorities. We suggested further consideration and potential refinement of the Handbook to ensure that its practical implementation is proportionate for all sizes of multinational enterprise, not just those with the greatest size, complexity and resources. Similarly, we recommended that further guidance for tax authorities would be supportive to prevent the weighting of expectations towards the government with the most demanding interpretation of this risk assessment process.

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