3 reasons to question whether the new OECD Guidance on Profit Split is fit for purpose

The Discussion Draft “Revised Guidance on Profit Splits” released by the OECD 22 June 2017 does not provide taxpayers and tax administrations with a thorough and univocal guidance on when and how to apply the profit split method. Rather, we believe that some paragraphs could create confusion and lead to a misuse of the method.

Our concerns relate to three overall issues

• The proposed hierarchies are not based on sound business arguments
• The Discussion Draft should clarify the key concepts underpinning the profit split method
• The Discussion Draft should make technical clarifications with respect to the economic ownership of intangibles and the use of segregated vs. total profits

We provided our comments on 15 September 2017