Future of the Arm's-Length Principle
Arm's-length principle versus global formulary apportionment鈥攔ead about how BEPS 2.0 and other OECD initiatives are reassessing transfer pricing
The arm鈥檚-length principle has been the cornerstone of the international tax system for about a century; that system is now in a state of flux and seems under threat. The OECD BEPS 2.0 project is seen by many as a potential paradigm shift that, in the medium term, will lead to the end of transfer pricing as we know it.
In a series of articles, Thomas Bettge, Jessie Coleman, Quyen Huynh, and Alistair Pepper take a step back and reassess the merits of the arm鈥檚-length principle and the significant problems with global formulary apportionment鈥攖he perceived alternative. They also consider the impact that the BEPS 2.0 project and other OECD initiatives may have on the future of transfer pricing.
Collectively, the authors brings a wealth of tax policy insights, with experience at the OECD, the World Bank Group, and U.S. Treasury. For those that are interested in the future of transfer pricing, these articles provide real insights in where we鈥檝e come from and where we might be going to.
Dive into our thinking:
The Arm's-Length Standard After the Pillars
September 26, 2022 | In their third article on this topic, the authors explore the potential impact of the OECD鈥檚 current work program on how to approach transfer pricing. First, they focus on the impact of BEPS 2.0, and then, they consider the threats and opportunities created by the OECD鈥檚 ongoing work on article 9 of the model tax convention and potential improvements to dispute resolution mechanisms. | Tax Notes International
Download PDFIn Defense of the Arm鈥檚-Length Principle
September 19, 2022 | In a follow-up to their 鈥淲hy It鈥檚 Still Not Time for Global Formulary Apportionment鈥� article, the authors argue in this article that all the proposed alternatives to the arm鈥檚-length principle lack its two key benefits of neutrality and flexibility and looks ahead to what the future may bring. | Tax Notes International
Download PDFWhy It's Still Not Time for Global Formulary Apportionment
August 22, 2022 | The international tax system is in a state of flux, with potentially significant changes being driven by the OECD鈥檚 BEPS 2.0 project. Academics and the European Commission are (again) asking whether it is time to global formulary apportionment. The authors of this article explain why this time hasn鈥檛 arrived and explore the problems countries that chose to adopt formulary apportionment would face. | Tax Notes International
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