TPG2022 Chapter IX paragraph 9.24

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Some businesses have indicated that multinational businesses, regardless of their products or sectors, have reorganised their structures to provide more centralised control and management of manufacturing, research and distribution functions. The pressure of competition in a globalised economy, savings from economies of scale, the need for specialisation and the need to increase efficiency and lower costs have all been described as important in driving business restructurings. Where anticipated synergies are put forward by a taxpayer as an important business reason for the restructuring, it would be a good practice for the taxpayer to document, at the time the restructuring is decided upon or implemented, what these anticipated synergies are and on what assumptions they are anticipated. This is a type of documentation that is likely to be produced at the group level for non-tax purposes, to support the decision-making process of the restructuring. For Article 9 purposes, it would be a good practice for the taxpayer to document the source of these synergies and how these anticipated synergies impact at the entity level in applying the arm’s length principle (see Section D.8 of Chapter I). Care should be taken to ensure that, where deliberate concerted group actions are taken through a business restructuring, the associated enterprises contributing to the synergistic benefit after the restructuring are appropriately remunerated (see the example in the following paragraph). Furthermore, while anticipated synergies may be relevant to the understanding of a business restructuring, care must be taken to avoid the use of hindsight in ex post analyses (see paragraph 3.74).

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