OECD publishes consolidated 2022 Transfer Pricing Guidelines for MNEs

OECD publishes consolidated 2022 Transfer Pricing Guidelines for MNEs

On the 20th January 2022, the Organisation for Economic Co-operation and Development (‘OECD’) published an updated version of their Transfer Pricing Guidelines for Multinational Enterprises (‘MNEs’) and Tax Administrations.

The OECD transfer pricing guidelines provide guidance on the application of the “arm’s length principle”, which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises.

The 2022 edition consolidates reports published in the previous years relating to the OECD/G20 BEPS.




The 3 main additions are:

  • Revised guidance on the transactional profit split method approved by the OECD/Inclusive Framework on BEPS published in 2018
  • Guidance for tax administrations on the application of the approach to Hard-to-Value Intangibles approved in 2018
  • Transfer pricing guidance on financial transactions approved in January 2020.


What’s “new”?


1.Profit Split guidance

The 2022 updated guidelines provide additional clarity on the circumstances where using the profit split method would be most appropriate.

The guidelines provide 3 criteria to take into consideration:

  • Highly integrated business operations
  • Unique and valuable contributions by each party to the transaction
  • Shared or separate assumption of risk

The guideline provides 16 examples to illustrate and guide MNEs to decide where the profit split method is or is not the most appropriate. 

The guideline also provide for the methods to be used to determine the profit to be split and more importantly how to split the profit. It clarifies the factors that can be used to split the profit such as assets of capital used, costs, employee compensation, number of employees or sales.


2. Hard-to value intangibles

The 2022 updates guideline provide tax authorities with more certainty in cases of hard-to-value intangibles. 

Hard-to-value intangibles are rights or assets whose value are highly uncertain at the time of their transfer between companies. At the time of the transfer, the future cash flow or income to be generated or the expected profit is difficult to predict. 

The 2022 updated guidance entitle tax authorities to determine (and even adjust) the pricing arrangements of a taxpayer to ensure that it is made at arm’s length. 

Under the 2022 guidance, tax authorities are allowed to adjust a pricing arrangement to take into account related information which should or could have been known to the multinational enterprise when the transaction was made. 


3. TP on financial transanctions

The 2022 updated guidance addresses issues relating to the classification of financial instruments, it deals with the evaluation and pricing of financial transactions and help determine what and when a risk free or risk-adjusted rate of return should apply. 

The 2022 guidance also provides guidance on how to calculate these returns. 


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