On 11 February 2016, the Australian Treasury launched a public consultation on the implementation of the transfer pricing guidelines developed as part of Actions 8-10 of the OECD BEPS Project, which focus on aligning transfer pricing outcomes with value creation. The new guidelines focus on:
- Transfer pricing issues relating to transactions involving intangibles (Action 8);
- Contractual allocation of risks and the resulting allocation of profits to those risks, as well as the level of return on funding provided by group members based on the level of activity undertaken by the funding company (Action 9); and
- Addressing profit allocations resulting from transactions which are not commercially rational, targeting the use of transfer pricing methods in a way which results in diverting profits from the most economically important activities of the MNE group, and neutralizing the use of certain payments to erode the tax base in the absence of alignment with value creation (Action 10).
Click the following link for additional information on the Treasury website, including the consultation paper and instructions for submitting comments. Comments are due by 26 February 2016.