The U.S. Government Accountability Office (GAO) has analyzed the Organization for Economic Co-Operation and Development (OECD) revised guidelines to reduce base erosion and profit shifting of multinational enterprises (MNE) and did not make recommendations.
Of the 15 actions issued by the OECD, the GAO was asked to review two for their potential impacts on the U.S. economy: revised transfer pricing guidelines and new transfer pricing documentation, including country-by-country reporting.
The transfer pricing guidance is designed to align MNE profits with the location of economic activity. It seeks to prevent corporations from shifting and assigning profits to lower-taxed related corporations by artificially setting below-market transfer prices of property and services.
The transfer pricing documentation action seeks to make MNE activities more transparent, through documentation and reporting shared among countries.
The GAO looked at how likely it would be that the action would reduce base erosion and profit sharing, what is known about the potential administrative and compliance costs of the action, and what is known about the potential effects the actions could have on the U.S. economy.
The GAO conducted a full review of these questions and interviewed officials from the IRS, the U.S. Department of the Treasury, OECD, and trade groups of industries likely to be affected by the actions.
No recommendations were made after the review and the GAO provided a draft of the report to IRS and Treasury for review and comment.