OECD Proposes Revisions to Transfer Pricing Guidelines on Intra-group Services

The OECD is proposing to update and modernise its Transfer Pricing Guidelines governing intra-group services.

The OECD Transfer Pricing Guidelines provide essential guidance on the valuation of cross-border transactions between associated enterprises for tax purposes. The proposed revisions to the guidelines on intra-group services aim to provide greater practical guidance while aligning the treatment of intra-group services with the Guidelines' foundational principles.

Importantly, the OECD states that the proposed revisions are not intended to change the general principles underlying the transfer pricing analysis of intra-group services.

Key proposed updates

The discussion draft released for public consultation proposes several updates, including:

• Greater emphasis on accurately delineating intra-group services through robust functional analysis.
• Clarification of the distinction between the benefit test and the arm's length pricing analysis.
• Updated guidance on shareholder, stewardship and duplicative activities.
• Refined guidance on the application of transfer pricing methods and documentation requirements for intra-group services.
• Greater clarity and practical illustrations through the inclusion of new examples.

Potential implications for MNEs

In a global economy where multinational enterprises (MNEs) play a prominent role, transfer pricing continues to be high on the agenda of tax administrations and taxpayers alike.

Although the proposed revisions will not fundamentally change the existing transfer pricing principles, they may encourage MNEs to revisit their intra-group service arrangements, transfer pricing policies and supporting documentation in anticipation of the final guidance.

Businesses may wish to consider whether their existing arrangements and documentation provide sufficient support for the services provided, the benefits received and the pricing applied.

Public Consultation 

Public consultation on the discussion draft took place from 1 June to 22 July 2026, providing stakeholders with an opportunity to submit their views on the proposed revisions.  The OECD published submissions from the public on 24 August 2026, shedding light on the key issues raised by stakeholders.  Common themes included: 

Benefit Test:  A significant focus of discussions centred on the benefit test.  The stakeholders preferred an ex-ante (i.e. anticipated or intended) approach  of assessing whether any benefit could reasonably have been anticipated at the time the service was delivered, rather than taking a retroactive approach.  Additionally, there is a call for flexibility in demonstrating expected benefits with practical business evidence, especially in cases where anticipated benefits do not materialize.  

It was also suggested that a project not achieving its intended outcome should not automatically imply that no service was rendered. 

Documentation: There is pervasive support amongst the stakeholders for clearer guidance regarding the necessary evidence to validate intra-group services.  However, a school of thought simultaneously also expressed that an overly detailed checklist can increase the compliance burden.  The emphasis here is on proportionality (i.e. a balanced approach), allowing businesses to illustrate the benefit and substance of a service without the need for extensive documentation for routine or lower-risk operations. 

Pricing: The submissions from stakeholders reaffirmed the importance of cost-based methods for routine services.  Nonetheless, stakeholders stressed that the choice of TP method should always be based on specific facts and circumstances.  Prioritizing profit split method should not make its application automatic just because a service is deemed complex, integrated, or strategically vital. 

Shareholder/ Stewardship Activities: Distinguishing between shareholder/ stewardship activities and chargeable intra-group services poses an ongoing challenge.  While the activities conducted solely in a parent’s capacity as a shareholder should generally not be charged to subsidiaries, the line blurs in areas like group governance, ESG initiatives, cybersecurity, and compliance with Pillar Two.  Stakeholders therefore advocated for clearer guidance on these boundaries to ensure consistent treatment of these activities. 

Low Value-Adding Services: Lastly, the stakeholders have asserted that the 5% markup utilized in the simplified approach for low-value adding services should not serve as a benchmark or minimum return for other types of services.  Services outside the simplified framework should continue to be priced based on the specific facts and circumstances as needed. 

Timing

The OECD has not yet announced an effective date for the proposed revisions. A meeting to discuss the outcomes of the public consultation is scheduled for November 2026 at the OECD Conference Centre in Paris.

The proposed revisions demonstrate the OECD's continued focus on clarity, consistency and robust analysis of intra-group services. While the general principles of the transfer pricing analysis are not intended to change, the additional guidance may raise expectations around how MNEs delineate, analyse and document their intra-group service arrangements.