Peter A. Barnes was quoted in Worldwide Tax Daily regarding his comments during the OECD Tax Conference's panel discussion on transfer pricing documentation. Panelists at the June 5th conference differed on whether the increased documentation requirements proposed by the OECD would be useful for legitimate purposes, but they stressed the importance of being ready for the new requirements. For the full article, please visit Worldwide Tax Daily's website (subscription required).
Excerpt taken from the article.
"Documentation is the taxpayer's first and best effort to tell their story," said Peter Barnes of Caplin & Drysdale. "If we blow it and we fail to seize the opportunity, then shame on us."
Barnes told the audience that it should take a positive view of the OECD work. He warned that absent coordination, documentation requirements would continue to diverge from country to country.
"Although there may be a lot of pain here," Barnes said, "in many ways I think it is terrific and beneficial to all of us if the OECD is leading this exercise and not just leaving it to every country to do what they want to do on their own."
Stephen Blough of KPMG LLP expressed skepticism of the value of requiring companies to provide a global picture of their operations to jurisdictions where they may only have a contract manufacturing operation.
"The stated perspective is -- in terms of what is new here, which is this global view of the company -- that they do need that for risk assessment," Blough said. "Whether that is going to be for good or evil in terms of getting to reasonable resolutions about what arms-length prices are remains to be seen."
Barnes countered that under the current system, companies have been able to make changes to their operations that produced different results while only showing country-specific information to the tax administrations.
"I think the governments legitimately, whether we go this route or not, want to see a larger part of the value chain, and that is not inappropriate," Barnes said.