Finance Proposes Tying Transfer-Pricing Rules To OECD Guidelines

Finance released a consultation paper on June6, 2023 proposing to rewrite Canada's transfer-pricing rules. The draft amendments incorporate base erosion and profit shifting (BEPS) concepts and introduce a "consistency rule" to align amounts determined under Canada's domestic transfer-pricing provisions with the OECD transfer-pricing guidelines (unless the context otherwise requires). This proposal reflects a departure from Canada's current approach to the guidelines, and lessons can be learned from Australia's experience with introducing a similar consistency rule.

The proposed link is to the 2022 edition of the guidelines. Future editions will not be automatically incorporated unless they amend the OECD's definition of "Transfer Pricing Guidelines" or introduce new regulations. The rules would also link to any other text prescribed by regulation, so other documents could be incorporated.