WASHINGTON Oct 14 U.S. multinationals will next
month be able to weigh in for the first time on recent proposals
from the Organisation for Economic Co-operation and Development
(OECD) on tightening oversight of tax-reducing "transfer
These financial strategies, involving how multinationals
value and price assets they move around the globe from one unit
to another, have been criticized by tax fairness advocates and
the OECD, a Paris-based club of rich countries.
At a public hearing in Paris set for Nov. 12-13, companies
will get to voice their concerns about the OECD's "base erosion
and profit shifting," or BEPS, project, unveiled in July. It
calls for curbing tax-avoidance through transfer pricing.
The United States Council for International Business
(USCIB), representing about 300 U.S. multinationals, has asked
to participate at the hearing, said Carol Doran Klein, USCIB's
tax counsel, on Monday.
A number of U.S. companies, including E. I. du Pont de
Nemours and Co, and Starbucks Corp, have raised
questions about the BEPS project with members of Congress and
the Obama administration, according to corporate lobbying
disclosures filed earlier this year.
Most recently, eBay Inc listed the "OECD proposals
to modify international tax rules," in an Oct 7 lobbying filing.
LinkedIn Corp and Priceline.com Inc have
told their shareholders that the outcome of the BEPS project
could adversely impact their tax bills, according to filings
with the Securities and Exchange Commission.
The OECD's suggestions to its member countries have no force
in law. Its recommendation can be influential, however, in
guiding governments toward new policies.
Transfer pricing can be managed in many ways. One, for
instance, is to shift corporate assets such as intellectual
capital into a low-tax country, then charge units in other
countries royalties or other fees for use of those assets.
Under existing international standards, the fees charged are
supposed to be set using an "arm's length" approach, meaning one
that replicates market-level values. In practice, fees are often
skewed so that profits can be shifted into the low-tax country
where the assets are located and out of higher tax countries.
These practices are legal, but tax fairness activists and
some less-developed countries are complaining about them.
The OECD had no immediate comment on Monday.