OECD Guidelines and Transfer Pricing: Global Solutions to Tax Avoidance?

Abstract

The proliferation of multinational enterprises (MNEs) has led to increasing concerns over tax avoidance practices facilitated by transfer pricing strategies. Transfer pricing refers to the pricing of goods, services, and intangible assets between related entities within the same corporate group. The Organization for Economic Co-operation and Development (OECD) has developed guidelines aimed at providing a framework for governments to regulate transfer pricing and curb tax avoidance. This paper explores the OECD Guidelines on transfer pricing, assessing their effectiveness as global solutions to tax avoidance. The study analyzes the challenges in enforcing these guidelines, the implications for tax policy, and the evolving landscape of international tax regulation. The findings indicate that while the OECD Guidelines represent a significant step towards harmonizing transfer pricing practices, their implementation faces hurdles that must be addressed to achieve meaningful tax compliance.