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UN Updates Transfer Pricing Practice Manual

Thursday, April 20, 2017

The United Nations Committee of Experts on International Cooperation in Tax Matters has released, in digital format, the second edition of the UN Practical Manual on Transfer Pricing for Developing Countries.

The 2017 edition of the TP Manual was launched at the UN Economic and Social Council Special Meeting on International Cooperation in Tax Matters, which was held in New York on April 7.

The updated version of the TP Manual has adopted a new format, and is divided into 4 parts for better clarity and ease of understanding. Part A relates to transfer pricing in a global environment; Part B contains guidance on design principles and policy considerations, including guidance on the arm's length principle central to transfer pricing analysis; Part C addresses practical implementation of a transfer pricing regime in developing countries; and Part D contains country practices.

The revised TP Manual includes new chapters on intra-group services, cost contribution arrangements, and on the treatment of intangibles. It includes significant updates to other chapters. The hard copy is to be released in mid October.

The latest TP Manual takes into consideration the outputs of the base erosion and profit shifting project, including providing revised guidance on documentation, comparability analysis, and bringing in an additional section on commodity transactions in the "Methods" chapter, also known as "the sixth method," drawn from developing country practice.

The UN Department of Economic and Social Affairs noted that the updated TP Manual "will be of invaluable importance for developing countries wishing to adopt, implement, or further improve their transfer pricing regulations."