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02 February 2021
In December 2020, the OECD published its Guidance on the Transfer Pricing Implications of the COVID-19 Pandemic covering the impact of the global health crisis on transfer prices and clarifying the practical application of the arm’s length principle in such times. The guidance covers four significant issues: (i) comparability analysis, (ii) losses and the allocation of COVID-19 specific costs, (iii) government assistance programmes, and (iv) advance pricing agreements.
In light of this guidance, NERA transfer pricing experts published a paper in which they summarise key considerations outlined by the OECD. The authors highlight the importance of an accurate analysis of risk assumption due to the pandemic. They also provide recommendations to taxpayers on how to deal with the impact of the pandemic and make the necessary adjustments to their current transfer pricing arrangements by: