What can we learn from the discussion draft of ‘A Toolkit for Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analyses’?


Kestutis Rudzika, Director

In 2017, the Platform for Collaboration on Tax released a draft toolkit – A Toolkit for Addressing Difficulties in Accessing Comparables Data for Transfer Pricing Analyses – that aims to address the challenges associated with retrieving comparables data for the analysis of transfer pricing (TP): an important aspect of international tax policy.

The Platform for Collaboration on Tax features RoyaltyRange (www.royaltyrange.com) as the European database for intangibles license agreements and royalty rates.

The Platform for Collaboration on Tax is a joint initiative between the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN) and the World Bank Group. It released the discussion draft to help developing countries overcome challenges associated with a lack of comparables data, so that they can conduct efficient TP analyses and make the best of the data that is available.

What does the draft toolkit discuss?

The discussion draft is one in a series of reports the Platform for Collaboration on Tax has created. The reports are designed to help developing countries implement the OECD/G20 Base Erosion and Profit Shifting (BEPS) initiative, so that they can safeguard their tax bases from aggressive tax planning. The discussion draft highlights these issues with respect to commercial databases:

  • Most commercial databases collate information produced for purposes other than transfer pricing.
  • With respect to commercial databases, many developing countries report two core challenges: access and limited data coverage. First, they highlight difficulties, including costs involved, in relation to accessing commercial databases. Second, even where they can be accessed, such databases often contain limited, or no, data concerning local economic operators that may potentially serve as comparables.

RoyaltyRange was initially designed as a transfer pricing database, with the aim to also use the data for tax, valuation, legal, patent box and benchmarking purposes.

RoyaltyRange provides data to more than 40 countries, including developing countries. We make sure that our database can be accessed by the government and public organizations and businesses worldwide, and that it provides a sufficient coverage for all types of analyses.

Some useful practical discussion points

The Platform for Collaboration on Tax mentioned some good practical points on the method selection and comparability, which could be employed when drafting your deliverable:

  • While the characteristics of the transaction are of primary importance in selecting the transfer pricing method, the availability of comparables information must also be considered.  This step, therefore, helps to determine the feasibility of potential transfer pricing methods ahead of the closer analysis.
  • The CUP method is most often applied for the licensing of some intangibles, particularly where the license is not unique and valuable, to benchmark a royalty rate.
  • Often, no reference information exists to compare highly complex transactions such as those involving unique and valuable intangibles. However, limitations in the availability of information can occur in relation to all transactions, not just those of a unique nature and complexity.

What is transfer pricing?

The discussion draft defines transfer pricing as ‘a price employed in a transaction between associated enterprises’.

Transfer pricing is a legitimate and necessary feature of the commercial activities of multinational enterprises. However, where the transfer prices used do not accord with internationally applicable norms or with the arm’s length principle under domestic law, they can distort the allocation of profit among the countries in which a multinational enterprise operates.

To find out more about the discussion draft toolkit, or to request access to our royalty rate database, contact us at RoyaltyRange today.

Kestutis Rudzika, Director


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