Key Highlights

On May 22, 2025, the OECD released an updated batch of transfer pricing country profiles, incorporating legislative and practical insights from 11 jurisdictions and introducing new profiles for Azerbaijan and Pakistan. These profiles reflect evolving approaches to complex transfer pricing topics, including hard-to-value intangibles and simplified methods for routine marketing and distribution functions. The update aligns with the OECD’s ongoing work under the Two-Pillar Solution to address tax challenges arising from the digitalization of the economy.

Notable Provisions

• Expanded Coverage: The updated profiles bring the total number of jurisdictions covered to 78.
• New Inclusions: Azerbaijan and Pakistan have been profiled for the first time.
• Focus Areas:
  • Hard-to-Value Intangibles (HTVI): Each profile now details domestic approaches to pricing intangible assets where valuation is particularly uncertain.
  • Streamlined Marketing and Distribution: Incorporates guidance on the simplified and standardized treatment of baseline marketing and distribution activities under Amount B of the OECD’s Two-Pillar framework.
• Core Topics Retained: Arm’s length principle, transfer pricing methods, comparability analysis, intra-group services, cost contribution arrangements, documentation requirements, safe harbours, and dispute resolution mechanisms remain central to each profile.

Why This Matters

The updated OECD transfer pricing country profiles bring much-needed simplification and clarity to a complex area of international tax. Key enhancements include guidance on hard-to-value intangibles (HTVI) and a new streamlined approach for routine marketing and distribution activities.

The streamlined approach, introduced under Amount B of the OECD’s Two-Pillar Solution, offers a standardized fixed return for entities performing limited-risk distribution functions, such as subsidiaries that buy and resell goods without owning intangibles or bearing significant risk. This removes the need for time-consuming comparability analyses and detailed documentation, making compliance easier and reducing the likelihood of tax audits and disputes. It’s particularly beneficial for businesses operating in countries with varied enforcement capacities.

The HTVI guidance provides clearer expectations for transactions involving intangibles, such as patents or proprietary software, helping businesses address valuation uncertainties and reduce the risk of post-transaction challenges.

Together, these updates promote consistency, transparency, and administrative efficiency, making transfer pricing more predictable and less burdensome for both multinational companies and tax authorities.

Next Steps

• Review Updated Profiles: Tax and transfer pricing teams should examine the revised profiles relevant to their operating jurisdictions, especially those that have adopted or are aligning with OECD guidance.
• Update Documentation: Align documentation strategies with the new OECD insights, particularly where HTVI or streamlined Amount B transactions are material.
• Monitor Future Releases: As further batches are expected throughout 2025, stay engaged with OECD updates to remain compliant across all operational jurisdictions.
• Access the Profiles: Visit the OECD Transfer Pricing Country Profiles Portal for the latest information.