Key impacts of the OECD's new transfer pricing approach for distribution activities

The Simplified and Streamlined Approach (‘SSA’) marks a major shift in the OECD's approach to transfer pricing for those distribution activities which fall within its scope.

Moving away from the use of bespoke benchmarking searches, it applies a formulaic method for determining acceptable operating profits for group entities involved in the wholesale of tangible goods. While this may offer some businesses a valuable opportunity to simplify their transfer pricing compliance, the qualifying conditions and underlying calculations are complex. It will be up to each country to decide whether they will apply the SSA and, if so, whether they will do so on a mandatory basis or allow taxpayers to decide for themselves whether to opt-in. This creates the potential for a complex global adoption landscape.

With final details on the design and scope of the SSA expected in late March 2024 there is just a 9-month window before countries begin to apply the new approach, which the OECD suggests they can use for fiscal years starting on or after 1 January 2025. This short window provides an opportunity for businesses to understand the impact of the SSA and proactively prepare for any impact on profits and effective tax rates.

Join our workshops to learn more

Join our global specialists for an in-depth discussion of the SSA and the impact we expect for in-scope businesses.

• Background and context – the BEPS programme
• Discussion of the detailed rules and qualifying conditions
• Practical experiences so far of the calculations required to apply the SSA in practice
• Key actions to consider for businesses which may be within the scope of the SSA
• Q&A

The sessions and Q&A will be presented by Duncan Nott, Nataliya Esakova, Joe Sturge and Samuel Maina.