This paper highlights key changes made to the guidance on profit split methods in the 2022 OECD Transfer Pricing Guidelines and potential implications for MNE groups and tax administrations. In addition, it will discuss the increased use of the OECD profit split methods during the recent global COVID pandemic, considering why this methodology is becoming more favoured by both tax authorities and taxpayers. With the help of case studies and experience we will discuss:
- Evolution of profit split methodologies across the world and examples of the most common issues
- From theory to practice: lessons from implementation of profit split methodologies
- Key take-aways from the application of profit splits in a less stable environment, including consideration of people functions, remote teams, losses
- Looking to the future of profit split as a methodology