Transfer pricing in emerging countries

During its 8th annual session held in Geneva on 15-19 October 2012, the "Committee of Experts on International Cooperation in Tax Matters" of the United Nations adopted the "Practical Manual on Transfer Pricing for Developing Countries" (hereinafter "UN Manual ").

The UN Manual was adopted after the publication of a "Working Draft of Practical Manual on Transfer Pricing for Developing Countries" dated 31 May 2011, and after a second version of the same document dated October 2011. On the substantive level, the UN Manual is consistent with the OECD transfer pricing Guidelines and is characterized by the operation and the high level of detail, with particular reference to the practical application of the methods of transfer pricing and the performance of the comparability analysis. In fact, the UN Manual:

• Is a practical manual rather than a legislative model;

• Has been drawn up in a clear, simple and comprehensive manner;

• Was written in English, but will be translated into the other official languages of the UN soon;

• Addresses the practical problems of developing countries, so that it can become a useful practical tool for problem solving;

• Recognizes the diversity of individual states and enhances those who have made arrangements for equitable and effective systems in a perspective of sustainable development;

• Aims to improve the flow of information, especially in those countries where the system of exchange of information is lacking, also due to the limited available resources.

With regard to the selection of the "most appropriate transfer pricing method" and the performance of the comparability analysis, the UN Manual, in line with the OECD Guidelines, look at the functional analysis as the key starting point. This must be able to allow :

• The identification and intragroup transactions;

• The identification of the characteristics that a particular transaction should have in order to be selected as comparable;

• The determination of any adjustment on the comparable;

• Checking the reliability of the selected method;

• The determination of the suitability of the selected method to be even "the most appropriate" if changes are related to the transactions, functions, risks or allocation of assets.

During the 9th annual session of the Committee of Experts on International Cooperation in Tax Matters, scheduled for October 21 to 25, 2013, the UN Manual should be finalized. In the new version, it should include, in particular, a special chapter devoted to the discipline of the transfer pricing of intangibles.