Since the G20 and the Organisation for Economic Co-operation and Development (OECD) initiated the Base Erosion and Profit Shifting (BEPS) Project, the OECD has released multiple transfer pricing related guidelines and handbooks from July to September 2017, including: (1) the 2017 edition of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the 2017 TP Guidelines); (2) the updated guidance on the implementation of Country-by-Country Reporting (CbCR) under BEPS Action 13 (the updated CbCR Guidance); and (3) two CbCR implementation handbooks, i.e. Country-by-Country Reporting: Handbook on Effective Implementation (CbCR Implementation Handbook), and Country-by-Country Reporting: Handbook on Effective Tax Risk Assessment (CbCR Risk Assessment Handbook).
Specifically, the 2017 TP Guidelines incorporate a number of revisions which the OECD has made to the 2010 TP Guidelines as part of its BEPS Project, including: revisions introduced under BEPS Actions 8-10 (Aligning Transfer Pricing Outcomes with Value Creation) and 13 (Transfer Pricing Documentation and Country-by-Country Reporting), revised guidance on safe harbours, and conforming changes to other parts of the Guidelines. The updated CbCR Guidance provides further guidance for the taxpayers on how to prepare CbCR, and represents the complete set of published OECD guidance related to CbCR. CbCR Implementation Handbook and CbCR Risk Assessment Handbook aim to provide tax authorities with practical guidance on how to implement CbCR and utilise the results from CbCR, and to help tax authorities to incorporate the BEPS Action 13 requirements into domestic legislation and establish corresponding risk assessment mechanism.
China as a member of G20 proactively participates in the BEPS Projects, and has published a series of corresponding domestic regulations. It is recommended that when interpreting these OECD guidelines and handbooks, the multinational enterprises (MNEs) should focus on not only the revisions and changes made by OECD, but also the China tax authorities’ unique views and positions, so as to better manage transfer pricing risks in this country.