The OECD has prepared a paper in respect of transfer pricing comparability data and its use in developing countries. This is intended to find a response to concerns about the quality of comparable data available in developing countries. The lack of suitable comparables makes it more difficult to administer transfer pricing, especially in view of the scarce resources available to some tax administrations. The OECD paper looks at how to increase access to the sources of comparable data and improve the amount of data included in the available commercial databases. The paper gives guidance on how to select foreign comparable transactions and on making adjustments to the comparable data where necessary.
Another issue considered by the OECD paper is the use of methods that do not need comparable transactions, for example the profit split method, supply chain analysis or the transfer pricing method that takes account of commodity prices that is used in some developing countries. The paper also considers the benefits of using advance pricing agreements and using the mutual agreement procedure under tax treaties.
