OECD Releases Transfer Pricing Guidance On Financial Transactions

On the 11^th of February OECD released the final Transfer Pricing guidance on financial transactions (the Report). The existing OECD TP Guidelines ( the Guidelines) will be updated to include these new guidelines which are expected to contribute to the avoidance of transfer pricing disputes and double taxation.

The Report in general describes the transfer pricing aspects of financial transactions, and also provides a number of examples to illustrate the principles discussed. The Report is focused on the following 5 sections:

• Identifying the commercial or financial relations

  This section of the Report concentrated on whether a prima facie loan should be regarded as a loan or should be regarded as some other kind of payment, in particular a contribution to equity. It also clarifies that the guidance included in this Report does not prevent countries from implementing approaches to address capital structure and interest deductibility under their