Soft Law, Hard Realities and Pragmatic Suggestions: Critiquing the OECD Transfer Pricing Guidelines

Document Type

Book Chapter

Publication Date


Source Publication

Schön, W., Konrad, K. (eds) Fundamentals of International Transfer Pricing in Law and Economics. MPI Studies in Tax Law and Public Finance, vol 1. Springer, Berlin, Heidelberg.


This paper briefly reviews and critiques the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2010). It comments on the political, economic and legal contexts in which transfer pricing issues arise and the “soft law” nature of the Guidelines. Among the hard realities are that soft law depends on domestic law to take effect and MNE’s are able to shift income to low-tax jurisdictions through transfer pricing strategies. The paper suggests that the Guidelines be revised in order to “harden” the impact of the soft law and to make the transfer pricing rules more effective in preventing double taxation as well as preventing income shifting.

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