OECD changes to the transfer pricing of intangibles

In 2016, the OECD released its final guidance on transfer pricing issues as they relate to the development, enhancement, maintenance, protection and exploitation of intangibles; including patents, trademarks and know how.

This new guidance material has been developed because most tax authorities and the OECD believe that the transfer pricing of intangibles has long been used as a mechanism for multinational groups to move profits (and therefore tax) from high tax jurisdictions to low/no tax jurisdictions. In its new guidance material, the OECD is seeking to establish a transfer pricing framework for intangibles that will ensure profits associated with the transfer or use of intangibles are appropriately allocated in accordance with (rather than divorced from) value creation.