KPMG report: Survey on application of control of risk and DEMPE frameworks, focus on United States and UK

How local tax authorities are approaching the concepts of control of risk and DEMPE

How local tax authorities are approaching the concepts of control of risk and DEMPE

The OECD in 2015 reached agreement on revised transfer pricing guidance as part of the base erosion and profit shifting (BEPS) actions 8-10, which has transformed how tax authorities around the world approach transfer pricing. The concepts introduced—like the six-step control of risk framework for analyzing transactions involving intangibles and development, enhancement, maintenance, protection, and exploitation (DEMPE) functions—are now core to the practice of transfer pricing. Countries (as well as companies) took time to get up to speed with these new concepts, and most tax authorities, sensibly, did not seek to apply the new guidance retroactively (though there have been exceptions). Now tax practitioners are finally seeing a more complete picture of how different tax authorities are applying core concepts of the control of risk and DEMPE.

KPMG LLP tax professionals have surveyed KPMG member firms from around the world regarding how local tax authorities are approaching the concepts of control of risk and DEMPE and is preparing a series of articles summarizing the findings from that survey and identifying some common trends and themes.

Read a May 2023 report* [PDF 332 KB] focused on findings from the survey of the KPMG member firms in the United States and the UK

*This article originally appeared in Tax Notes Federal and Tax Notes International (8 May 2023) and is provided with permission.



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