Revised Guidance on the Application of the Transactional Profit Split Method: Evolution or Revolution?

The OECD, in response to the mandate under the BEPS Project of developing rules in order to ensure allocation of profits in line with the actual value creation, recently revised the guidelines provided for the application of the transactional profit split method. This article analyses the new provisions contained in the Revised Guidance 2018 and discusses practical approaches which can be taken in order to apply the method in a reliable manner, and to some extent elucidates the OECD’s thoughts on some particular issues.