This is an HTML version of an attachment to the Freedom of Information request 'Code of Conduct Group on business taxation - meeting background documents'.

Ref. Ares(2016)3151706 - 01/07/2016
doc 11
Transfer pricing – Transparency and exchange of information 
Report from the Commission Services to the Code of Conduct Group 
summarising the discussions in subgroup A. 

The issue of transparency and exchange of information in the transfer pricing 
area was discussed at meetings of subgroup A (hereinafter referred to as “the group”), 
on 19 March and 1 April 2001. The documents 7142/01 FISC 46 and 7552/01 FISC 
54  (hereinafter referred to as FISC 54) prepared by the chair of the group served as a 
basis for the discussions.  

Both working papers from the chair of the group were based on paragraph 17 
of Annex I to the report 13563/00 FISC 193, which makes a distinction between 
exchange of information on a yearly basis and exchange of information in individual 

The purpose of this paper is to report to the Code of Conduct Group the 
outcome of the discussions in the group.  

The subject of transparency and exchange of information in the transfer 
pricing area raises a number of complex and technical problems. Despite the helpful 
papers from the chair of the group, the group was, due to the relatively short time 
available not able to reach any final conclusions. The discussions were however very 
useful and established a good basis for further work. 

The clear majority of Members of the group indicated that they support the 
idea of improving transparency through exchange of information in the transfer 
pricing area, although a number of specific issues and details require further 
clarification. It was suggested that a questionnaire be used to obtain more factual 
information on problem areas and to get precise information on what type of 
information Member States would find useful to exchange. 


The following paragraphs outline in more detail the discussions in the group.  
Exchange of information on a yearly basis  
7 Most 
Members of the group (hereinafter referred to as “Members”) were in 
favour of an exchange of information on a yearly basis. Transfer pricing is a major 
factor in the context of tax competition. Lack of transparency may for instance 
operate so as to create harmful tax measures. It is therefore necessary to improve 
transparency through annual exchange of information. Some Members, however, 
expressed some doubts about the usefulness of exchanging publicly available 
information on a yearly basis.  

There was a broad consensus that it might not be possible to obtain a perfect 
result in the first instance but that it nevertheless was important to start the process, 
and that both the types of information being exchanged and the relevant procedures 
could be revised once some experience has been gained. Similarly, there was 
agreement that the exercise should not impose an undue burden on tax administrations 
while still preserving the benefits to be derived from transparency and increased 
exchange of information.  

The degree of usefulness of a yearly exchange of information depends on 
which information should be the basis for such information. It was generally agreed 
that it should be possible to include not only public information of a general nature 
but also more specific information, as long as it is possible to secure anonymity in 
individual cases. Information concerning individual taxpayers that is confidential, 
protected by law or regulations, would not fall within the scope. 
The question of exchange of information concerning Advance Pricing 
Arrangements (APAs) or other advance agreements on transfer pricing involving third 
country companies were discussed. Some Members of the group found that such 
information would not be useful and also expressed concern related to confidentiality. 
Another view expressed was that such information would in principle be very useful 

but that the modalities had to be discussed. (On the aspect of third country companies, 
see also paragraphs 18 and 19 below).  
The group agreed that all Member States should fully participate in the 
information exchange. Some Member States stressed, however, that they have no or 
little experience on transfer pricing or on APAs. Although this situation would not 
prevent such Member States from exchanging information on a reciprocal manner it 
would of course have an impact on the amount of information that, on their part, 
could be exchanged. This should not be seen as a violation of the principle of 
FISC 54 lists some specific items of information concerning the use of transfer 
pricing guidelines in practice, the number and kind of APAs and the procedures for 
APAs, that could be exchanged on a yearly basis: 
a) Use of transfer pricing guidelines in practice;  
No Member said that they would not be able to exchange the items of information 
listed under this heading. 
b) Number and kind of APAs;  
The vast majority of Members expressed the view that this information would be 
useful but that it was necessary to establish the appropriate level of aggregation in 
order to protect confidentiality of individual taxpayers.   
c) Procedures for APAs;  
No Member said that they would not be able to exchange the items of information 
listed under this heading. 
A few Members referred to difficulties of a practical nature resulting from the 
different administrative burden, because of the sizes of the tax administrations, 
between the smallest and the biggest Member States.   
Introducing a yearly exchange of information raises questions on the 
procedures for such an exchange. A possible solution would be that Member States 

submit the information to the Commission, who would co-ordinate the procedure. The 
Commission services said that they would be prepared to undertake this role. The 
Commission services expressed the view that some kind of standardised reporting 
format could usefully be developed.  
Exchange of information in individual cases  
14 Most 
Members of the group were in favour of more exchange of information 
in individual cases as compared to the current standard practices.  
The relationship to the ad hoc Working Party on Tax Fraud raised by FISC 54 
were discussed by the group. It was generally considered that the work already done 
by this Working Party could be taken into account and that maybe the same 
procedure, i.e. a questionnaire, could be followed.  
a) Notification of APAs, rulings or any other advance agreements concerning transfer 
It was generally recognised that unilateral APAs or other advance agreements 
on transfer pricing is an area where there is particular interest in improving the 
exchange of information. Several Members indicated that they do not conclude 
unilateral APAs etc.  
The OECD Transfer Pricing Guidelines (hereinafter referred to as the 
“Guidelines”) discourages the use of unilateral APAs. In the light of this FISC 54 
raises the issue of whether it would be useful if Member States were not to enter into 
unilateral APAs etc. before having invited other states affected to conclude a bilateral 
or multilateral APA, or if it would be sufficient if the other state was immediately 
notified of such a unilateral agreement. Those Members that expressed a view 
considered that Member States should not enter into unilateral APAs etc. covering 
transfer pricing with companies of other Member States or with third country 
companies. No Member objected to informing other Member States concerned either 
before or immediately after concluding a unilateral APA etc.  

Members of the group consider that exchange of information of APAs with 
third country companies would be relevant. However, with respect to such exchange 
of information some Members expressed concern that there would be no legal basis 
for exchanging such information. A number of Members considered one should seek 
to provide for the right legal base. 
It was mentioned that it is usual practice for third country companies – in 
advance of deciding on the location of business - to approach several Member States’ 
tax authorities individually to obtain the best possible conditions. 
A number of Members considered the reference to Member States concerned 
in paragraph 17 of Annex I to doc. 13563/00 FISC 193 must be understood as having 
a broad scope.  
It was only briefly discussed how the expression necessary information in the 
said paragraph 17 should be interpreted. In FISC 54 it is suggested that information 
should be exchanged to the extent that it enables other Member States to apply the 
arms length principle according to the Guidelines. 
b) Notification of MNEs use of a transfer pricing method outside the OECD Transfer 
Pricing Guidelines  
This item was only subject to very limited discussion.