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Patricia G. Lewis Discusses Bilateral Safe Harbors in Tax Management Transfer Pricing Report

November 29, 2012, Tax Management Transfer Pricing Report
Excerpt taken from the article.

Paris--Multilateral safe harbors are a good idea but could take a long time to work out, so in the meantime, bilateral safe harbors are the best bet to make early progress on simplifying transfer pricing for certain frequent transactions, the Organization for Economic Cooperation and Development's transfer pricing chief said Nov. 12.

Joseph Andrus, who heads the OECD's transfer pricing unit, made his comments on the first day of the organization's Nov. 12-14 public consultation on transfer pricing drafts at the OECD's Paris headquarters.

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Patricia Lewis of Caplin & Drysdale in Washington, D.C., told the consultation that the discussion draft indicates that, "despite previous reservations, safe harbors today make sense from almost every perspective. Safe harbors, especially bilateral ones, have the potential to be truly transformational to global transfer pricing administration."

Lewis said safe harbors will help tax administrations and taxpayers deal with acute resource restraints caused by expansion of cross-border trade, as well as growing complexity of transfer pricing requirements, and help eliminate double taxation.

In particular, she said bilateral safe harbors are ideal for the many relatively benign simply cross-transactions for which well-established metrics exist, allowing authorities to focus their resources on more challenging transactions.

"Bilateral safe harbors enable governments and taxpayers to test drive solutions to selected transfer pricing configurations where the values and the trade-offs are known and controllable. If the initial experience is good, the scope can then be expanded," said Lewis.

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