• Where Have All the Transfer Pricing Safe Harbors Gone? A Plea for Reinvigoration
  • April 27, 2017 | Author: Patricia Gimbel Lewis
  • Law Firm: Caplin & Drysdale, Chartered - Washington Office
  • In May 2013, the OECD finalized guidance on transfer pricing safe harbors that had been first proposed a year earlier. 1 The guidance substantially revised a chapter in its transfer pricing guidelines and appended model memoranda of understanding that could be adapted among governments to establish bilateral safe harbor arrangements. Use of safe harbor MOUs could enable taxpayers to achieve cross-border transfer pricing certainty and minimize governmental administrative costs for many common transactions involving low- risk functions. Practitioners, taxpayers and public officials hailed the guidance. The concept particularly caught the fancy of the Internal Revenue Service, which established a working group on the subject and formally requested public comment. IRS officials were predicting that ground-breaking bilateral agreements might emerge within a few years.