Thank you for having me here today. The NFTC appreciates the OECD’s efforts to update Chapter VII of the Transfer Pricing Guidelines, especially the objective of providing greater clarity and practical guidance concerning intra-group services. We support this initiative, provided that the revisions remain consistent with the stated objective of clarifying, rather than fundamentally changing, the existing transfer pricing framework.
Our principal concern is ensuring that the final guidance provides greater certainty and administrability for both taxpayers and tax administrations. In particular, we believe the guidance should preserve a facts-and-circumstances-based application of the benefit test, recognize the commercial realities of centralized group services, and provide appropriate flexibility in the selection of allocation and pricing methodologies.
It is also essential that documentation requirements remain proportionate to the nature and materiality of the services involved, particularly for routine and low-value-adding services. Finally, the guidance should promote consistent application across jurisdictions and ensure that legitimate transfer pricing positions are not subject to inappropriate enforcement measures.
We look forward to continuing to work constructively with the OECD to ensure that the final guidance achieves its stated objectives while maintaining the certainty and administrability that multinational businesses require. Let me reiterate the priorities outlined in our written comments:
- Preservation of the existing transfer pricing framework is critical. Any revisions should be clarificatory, not substantive. They should not be used to reopen prior-year positions, agreed APAs, or settled arrangements absent material changes in facts and circumstances.
- The benefit test should apply prospectively, based on the facts and circumstances that existed at the time the services were performed, not with the benefit of hindsight. The question should be whether a reasonable expectation of economic or commercial benefit existed when the services were performed. If a reasonable expectation of a benefit existed when the services were performed, then the services are chargeable.
- Maintaining a narrow definition of shareholder activities is vital. We should not discount the provision of governance, management, compliance, and oversight functions as they may provide real economic or commercial benefits to subsidiaries. They should not automatically be classified as non-chargeable shareholder activities.
- The guidance should respect reasonable and consistently applied allocation methodologies. Allocation keys should be reasonable proxies for expected benefits, with flexibility to account for industry practices and available information.
- Documentation requirements should remain proportionate. Documentation requirements should follow a tiered, risk-based approach. The documentation listed in new Section D is overly burdensome as a standard expectation for most services transactions (other than high-risk transactions). The documentation requirements of paragraph 7.95 of the consultation draft are sufficient for routine and low-value-adding services given that such services represent relatively low risk of profit shifting.
- [The new documentation language (section D, beginning at 7.71) has the potential to cause real mischief as tax authorities could deny deductions when, in their view, taxpayers do not provide “sufficient” documentation to support a benefit. ]
- Legitimate taxpayer positions should be protected from coercive enforcement. Ordinary transfer pricing disagreements should not be escalated into criminal proceedings absent fraudulent intent or other indicators of fraud.
We look forward to continuing this important dialogue with the OECD on this update.
NFTC previously submitted comments for this consultation; you can read them here: NFTC Comments on Section 987 Proposed Regulations – November 12, 2026
