Stefanie Perrella, Managing Director, and Zachary Held, Director, in Duff & Phelps Transfer Pricing practice, authored an article in Transfer Pricing News (TP News) titled, “Augmenting Loan Documentation in light of Chapter X of the OECD Transfer Pricing Guidelines”. The OECD released its Final Report, Transfer Pricing Guidance on Financial Transactions, (Final Guidance), which was simultaneously incorporated into the OECD Transfer Pricing Guidelines on February 11, 2020. This article outlines some of the items that taxpayers should consider to offer a proactive defense of potentially scrutinized areas with respect to inter-company loans, including loan terms, debt capacity analysis and business strategies.
The new Chapter X of the Transfer Pricing Guidelines is not limited to considerations for interest rate pricing, but also includes a framework for assessing the instrument’s accurate delineation as debt. Going forward, taxpayers with lenders or borrowers in OECD countries should consider this new guidance and augment their documentation accordingly.
Read the full article here.
