United Nations Practical Manual on Transfer Pricing
The United Nations Practical Manual on Transfer Pricing for Developing Countries is a response to the need, oft en expressed by developing countries, for clearer guidance on the policy and administrative aspects of applying transfer pricing analysis to some of the transactions of multinational enterprises (MNEs) in particular. Such guidance should not only assist policy makers and administrators in dealing with complex transfer pricing issues, but should also assist taxpayers in their dealings with tax administrations.
There are a number of other guiding principles that have informed this Manual and reflect the mandate of the Subcommittee involved in its drafting, including that:
- This is a practical Manual rather than a legislative model;
- The drafting should be as simple and clear as the subject matter permits;
- The Manual will be prepared initially in English, but with a recognition that this will not be the first language of most users. It should be translated at least into the other official United Nations languages;
- A key “value added” of the Manual is to be its practicality — addressing real issues for developing countries (and of course those dealing with the administrations of such countries) in a practical and problem-solving way. It therefore seeks to address the theory of transfer pricing, but in a way that reflects developing country realities in this area;
- The Manual, as a product of the United Nations Committee of Experts on International Cooperation in Tax Matters, has a special role in reflecting the diversity of the United Nations Membership and placing transfer pricing in its developmental perspective. This recognizes both the importance to development of fair and effective tax systems, but also the fact that foreign investment, on appropriate terms, is seen as an important path to development by most countries;
- Helpful guidance in this complex area must, in particular, be geared to the inevitable limitations in some countries’ administrations, and deficits in information and skills that many countries are affected by in this area. Issues, in particular, of building and retaining capability as well as the need for focus and efficiency in dealing with limited resources, bear strongly on the approach taken in the Manual;
- Practical examples relevant to developing countries have been especially relied upon, because the experiences of other developing countries in addressing the challenges of transfer pricing are an important way of finding eff ective solutions that work in their context, and of doing so in the most cost and time eff ective ways; and
- Consistency with the OECD Transfer Guidelines has been sought, as provided for in the Subcommittee’s mandate and in accordance with the widespread reliance on those Guidelines by developing as well as developed countries.
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