The Organisation for Economic Co-operation and Development (OECD) today issued guidance on the practical application of the arm's length principle under the challenges posed by the coronavirus pandemic.

The guidance provides "clarification and support for taxpayers and for tax administrations as they evaluate and administer the application of transfer pricing rules for periods impacted by the COVID-19 pandemic," the OECD explains. Four priority issues are identified and discussed in the report:

• Comparability analysis
• Losses and the allocation of COVID-19 specific costs
• Government assistance programs
• Advance pricing agreements (APAs

"[T]he pandemic may raise novel issues or exacerbate in complexity or magnitude the occurrence of certain transfer pricing issues (e.g., effect of government assistance or the availability of reliable comparable data)," the report notes. The report poses and answers dozens of questions on practical and technical issues for taxpayers and administrators applying transfer pricing rules for the financial years impacted by the pandemic.

The 31-page text of the OECD report is posted here.

An OECD blog post on issues discussed in the guidance is posted here.

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