![]() The tax authority concluded in a TP audit that since the group's activities were highly integrated and the key value driver of the business was technology that was owned by a Finnish entity, the residual profit split method was the correct approach to set arm's-length prices and imposed TP adjustments accordingly. In the case, the taxpayer had applied traditional transactional methods – such as the comparable uncontrolled price method (CUP method), the cost plus method (CPM) and the resale price method (RPM) – to price its intra-group transactions. In Finland, on the other hand, there is a recent Supreme Administrative Court level decision (KHO 2018:173) where the court ruled that the tax authorities should apply in tax audits the version of the guidelines that was available at the time of filing the corporate income tax returns for the year(s) in question. In many countries, there are no specific rules regarding the application and these countries typically emphasise the question, to what extent do the revised guidelines merely clarify the existing guidance and to what extent they comprise fundamentally new guidance or change to previous guidance. Although the new version is not formally a precedent for interpreting UK TP rules in an earlier period, in practice HMRC audit teams often apply the revised guidelines in tax audits. For example, in the UK, HMRC tends to view the 2017 guidelines as a clarification and improvement of the existing guidelines, rather than a new set of rules per se. Other countries have a specific rule on the matter. Many countries, such as the Netherlands, apply a continuous or ambulatory interpretation and thus refer to the most recent version of the guidelines for all open tax years. With respect to which version of the guidelines should be applied, there are different answers in different countries. In this respect, the main alternatives are a 'static approach' where the tax treaty is interpreted in accordance with the OECD commentaries that existed when the treaty was concluded and an 'ambulatory approach', where the subsequently adopted commentaries (if any) are accepted as the source of interpretation. ![]() In tax treaty law, there has long been debate on the relevance of changes to OECD commentaries for purposes of interpreting previously concluded tax treaties. Thus, the same interpretive principles that guide treaty interpretation also play an important role with respect to the guidelines. The guidelines provide guidance on the application of the "arm's-length principle" set forth in Article 9 (associated enterprises) of the OECD Model Tax Convention. OECD Guidelines as a source of interpretation
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