On 19 December 2014, the OECD invited comments from interested parties on a Discussion Draft on revisions to Chapter I of the Transfer Pricing Guidelines (including risk, recharacterization, and special measures). This work relates to Actions 8, 9, and 10 of the Action Plan on Base Erosion and Profit Shifting (BEPS).

NERA transfer pricing experts Dr. Emmanuel Llinares and Dr. Vladimir Starkov submitted comments on a number of issues addressed in the Discussion Draft. Their comments address the key aspects of a comparability analysis; the role of contractual terms; the consideration of alternative options realistically available; functional analysis; risks and responsibility; moral hazard; risk-return trade-off; the categories of risk; the allocation of responsibility for risk; and a new term of art introduced by the Draft, the “fundamental economic attributes” of arrangements between unrelated parties.