BDO Transfer Pricing News - Issue 38

The OECD project on the tax challenges arising from the digital economy continues to capture the attention of much of the tax world. Transfer pricing practitioners have been particularly interested in the work around Pillar One of the framework that most members of the OECD/G-20 Inclusive Framework on BEPS agreed to in October 2021. In February 2022, the OECD introduced two sets of draft model rules for public consultation focusing on aspects of “Amount A,” the share of a business’s residual profits that will be subject to the new taxing right created under Pillar One of the October 2021 two-pillar agreement. We discuss the draft rules -- on nexus and revenue sourcing and tax base determination – in this issue.    

The OECD has been busy in other areas, issuing a new edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations to replace the version issued in 2017, and releasing the third set of 2021/2022 updates to the transfer pricing profiles of 28 jurisdictions, bringing the total number of countries covered to 91.

In a development that some consider long overdue, the South African tax authorities recently introduced draft legislation that would enact an advance pricing agreement (APA) programme. Implementation of an APA programme might face some difficulties – primarily revolving around the costly nature of the programme and the difficulty in finding trained personnel – but most observers would deem it a step in the right direction.

In another long-awaited development, Australia introduced patent box legislation that would effectively result in a concessional tax rate of 17% for ordinary and statutory income derived directly from medical or biotechnology patents for income years commencing on or after 1 July 2022.

Portugal and Mexico both enacted legislation in 2021 amending their transfer pricing regimes; the new rules for both countries entered into effect recently, and we include articles delving into the details of those new rules.

For most transfer pricing practitioners, transfer pricing is by definition an international issue. But U.S. taxpayers should not overlook the fact that transfer pricing considerations are also important for state and local tax purposes. Simply put, many state Departments of Revenue will care about transactions between a taxpayer’s separate U.S. legal entities, even in cases where the IRS does not.


  • Australia: Patent box legislation introduced
  • Mexico: Transfer pricing law changes enter into effect
  • OECD:
    • Draft model rules on Amount A of Pillar One released for public consultation
    • New edition of transfer pricing guidelines issued
  • Portugal: New transfer pricing rules and documentation requirements enter into effect
  • Rethink: Transfer Pricing: Critical success factors for establishing an Advance Pricing Agreement programme in South Africa
  • International: Transfer pricing bytes
  • United States: State transfer pricing takes center stage

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