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Pilar Barriguete, Director, and Edland Graci, Senior Associate, in the Transfer Pricing practice at Duff & Phelps, provide insights in MNE Tax titled, “The UN transfer pricing manual’s new chapter on financial transactions: the details”.
After many years without clear procedures on how best to attain an arm’s length remuneration with respect to financial transactions, two big intergovernmental organizations – the OECD and the United Nations (UN) – have stepped in with a series of proposals.
First, on July 3, 2018, the OECD released a public discussion draft on transfer pricing aspects of financial transactions.
And now, the UN Committee of Experts on International Cooperation in Tax Matters has contributed its grain of sand, releasing on April 8, 2019 a draft on financial transactions as an update to the Practical Manual on Transfer Pricing for Developing Countries.
Financial transactions have a significant impact on international trade and cross-border transactions because of their high frequency and amounts, the facility to shift profits and to erode taxable bases using such transactions, and their peculiar characteristics.
While the OECD and the UN Committee of Experts on International Cooperation in Tax Matters proposals have their differences and similarities, both share the same goal of tackling tax issues, specifically regarding financial transactions.
The full article is available on the MNE Tax website.