International Tax Developments
On 23 May, the OECD published its public discussion draft of the guidance on hard-to-value intangibles as part of the work on BEPS Action 8. The guidance aims to set out a common position for tax administrations to take when applying the adjustments resulting from the hard-to-value intangibles rules, which should in turn improve consistency and reduce the risk of double taxation. This guidance takes the form of a set of principles together with a number of examples which detail how the hard-to-value intangibles rules should be applied in specific scenarios.
An important point to note is that when assessing the reasonableness of intragroup pricing of transactions involving hard-to-value intangibles (e.g. the transfer of IP rights in development), tax authorities can use the facts as they turn out after the intragroup transaction as evidence of what would have been a reasonable price (or set of assumptions on value) for the transaction.