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transfer pricing rules or special measures for trans-
fers of hard-to-value intangibles; and (iv) updating
the guidance on cost contribution arrangements.
ACTION 9
– RISKS AND CAPITAL.
Develop rules to prevent BEPS by transferring risks
among, or allocating excessive capital to, group
members. This will involve adopting transfer pric-
ing rules or special measures to ensure that inap-
propriate returns will not accrue to an entity solely
because it has contractually assumed risks or has
provided capital. The rules to be developed will
also require alignment of returns with value crea-
tion. This work will be co-ordinated with the work
on interest expense deductions and other financial
payments.
ACTION 10
– OTHER HIGH-RISK
TRANSACTIONS.
Develop rules to prevent BEPS by engaging in
transactions which would not, or would only very
rarely, occur between third parties. This will involve
adopting transfer pricing rules or special measures
to: (i) clarify the circumstances in which transac-
tions can be recharacterised; (ii) clarify the applica-
tion of transfer pricing methods, in particular profit
splits, in the context of global value chains; and (iii)
provide protection against common types of base
eroding payments, such as management fees and
head office expenses.
ACTION 11
ESTABLISH METHODOLOGIES
TO COLLECT AND ANALYSE DATA
ON BEPS AND THE ACTIONS TO
ADDRESS IT.
Develop model treaty provisions and recommen-
dations regarding the design of domestic rules to
neutralise the effect (e.g., double non-taxation,
double deduction, long-term deferral) of hybrid
instruments and entities. This may include: (i)
changes to the OECD Model Tax Convention to en-
sure that hybrid instruments and entities (as well
as dual resident entities) are not used to obtain
the benefits of treaties unduly; (ii) domestic law
provisions that prevent exemption or non-recogni-
tion for payments that are deductible by the payor;
(iii) domestic law provisions that deny a deduction
for a payment that is not includible in income by
the recipient (and is not subject to taxation under
controlled foreign company (CFC) or similar rules);
(iv) domestic law provisions that deny a deduction
for a payment that is also deductible in another
jurisdiction; and (v) where necessary, guidance
on co-ordination or tie-breaker rules if more than
one country seeks to apply such rules to a trans-
action or structure. Special attention should be
given to the interaction between possible changes
to domestic law and the provisions of the OECD
Model Tax Convention. This work will be co-ordi-
nated with the work on interest expense deduction
limitations, the work on CFC rules, and the work on
treaty shopping.
ACTION 12
REQUIRE TAXPAYERS TO DIS-
CLOSE THEIR AGGRESSIVE TAX
PLANNING ARRANGEMENTS.
Develop recommendations regarding the design
of mandatory disclosure rules for aggressive or
abusive transactions, arrangements, or structures,
taking into consideration the administrative costs
for tax administrations and businesses and draw-
ing on experiences of the increasing number of
countries that have such rules. The work will use a
modular design allowing for maximum consistency
but allowing for country specific needs and risks.