Tag: Economic consequences

OECD COVID-19 TPG paragraph 3

The arm’s length principle has been found to work effectively in the vast majority of cases,1 and this principle-based approach to assessing intercompany prices is equally robust for evaluating controlled transactions in the face of the COVID-19 pandemic. The OECD TPG are intended to help tax administrations and MNEs find mutually satisfactory solutions to transfer pricing cases2 and should be relied upon when performing a transfer pricing analysis under the possibly unique circumstances introduced by the pandemic. 1Paragraph 1.9 of Chapter I of the OECD TPG. 2 Paragraph 15 of the Preface of the OECD TPG ... Read more

OECD COVID-19 TPG paragraph 2

During the pandemic period, many enterprises have faced or continue to face significant cash flow constraints, requiring them to develop and implement strategies to conserve and generate cash. Enterprises have seen wide swings in profitability, both upward and downward. Enterprises across a variety of industries have faced disruption to their supply chains, including the curtailment of their operations and corresponding reductions in output, and have been forced to change how their business is conducted (e.g. working from home). In many jurisdictions, factories, mines, shops and restaurants have been forced to close, at least temporarily. In some industries, demand has completely collapsed, while in others it has merely shifted channels or even increased (e.g. the market for online videoconferencing services). In the presence of significant financial hardship, some enterprises have reviewed their contractual arrangements with third parties to ascertain whether they remain bound by them or have attempted to renegotiate key terms, including requesting discounts or deferred payment. Given the significance ... Read more

OECD COVID-19 TPG paragraph 1

The impact of coronavirus (“COVID-19”) has been profound. The rapid spread of the virus has strained local medical infrastructures, led to restrictions on travel and social contact, and created unprecedented disruptions to the global economy ... Read more