OECD COVID-19 TPG paragraph 11

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In principle, any form of publicly available information regarding the effect of COVID-19 on the business, industry and controlled transaction may be relevant in ascertaining the arm’s length nature of an enterprise’s transfer pricing policy implemented for FY 2020. The following sources of information may support that determination through the comparability analysis, generally by estimating the effect of the COVID-19 pandemic on the controlled transactions under review:

  • An analysis of how sales volumes have changed during COVID-19, including whether the change is due to the use of other sales channels, and specifically compared to sales generated in pre-COVID years;
  • An analysis of the change in capacity utilisation relevant for the MNE group and the controlled transaction7, and/or transactions with independent parties;
  • Specific information relative to incremental or exceptional costs borne by parties to the controlled transaction (either with associated or unrelated parties) or by the MNE group as a whole;
  • The extent to which government assistance has been received and, if so, quantifying the effect and identifying the type of the assistance and its accounting treatment;
  • Details regarding government interventions that have affected the pricing and performance of controlled transactions;
  • Information from interim financial statements such as quarterly SEC filings or earnings releases;
  • Macroeconomic information like country specific GDP data or industry indicators from central banks, government agencies, industry or trade associations to the extent useful in understanding the context of the controlled transaction;8
  • Statistical methods such as regression analysis or variance analysis that are used to predict the extent to which a certain variable will vary with reference to other variables under certain specific conditions (e.g. the response of corporate profits in certain industries to GDP movements);
  • A comparison of internal budgeted/forecasted data relating to sales, costs and profitability, compared to actual results; and
  • An analysis of the effects on profitability or on third party behaviour observed in previous recessionary periods or using any data available in the current year, even if partial.

7 Paragraph 2.76 of Chapter II and illustration 3 in Annex I to Chapter II of the OECD TPG.

8 Paragraph 3.7 of Chapter III of the OECD TPG.

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