Most APAs include critical assumptions about the operational and economic conditions that will affect the transactions covered by the APA. The COVID-19 pandemic and the response of governments have dramatically affected the economic and market conditions and are likely to qualify as a breach of the critical assumptions (para. 44 b) and c) of Annex II to Chapter IV of the OECD TPG). A mere change in business results during the period affected by the COVID-19 pandemic would not, however, result in a breach of a critical assumption (unless the particular APA had a critical assumption regarding changes in business results).
OECD COVID-19 TPG paragraph 92
Posted on | By OECD
Category: OECD Transfer Pricing Guidelines (2017) | Tag: Advance pricing arrangement (APA), Breach of critical assumptions, COVID-19
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- OECD COVID-19 TPG paragraph 104Where the critical assumptions of an APA are breached, it is important that taxpayers collect and provide tax administrations with relevant supporting documentation. Depending on the particular critical assumption and other facts and circumstances, this could include, but may not be limited to: A description of the narrowest relevant taxpayer...
- OECD COVID-19 TPG paragraph 96In some situations, the APA agreement, domestic law or procedural provisions may prescribe procedures to follow, or describe the consequences that will arise, in situations where there is a failure to fulfil critical In these situations, tax administrations should follow the prescribed procedures.46 In other situations, tax administrations may have...
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