The Organisation for Economic Co-operation and Development (OECD) released a public consultation on June 1, 2026, proposing revisions to Chapter VII of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, which addresses intra-group services. Framed as an effort to align guidance on intra-group services to the foundational principles of Chapters I through III of the Guidelines rather than as a fundamental change, the proposed revisions are broad in scope but do not materially alter the existing framework for evaluating and pricing such services.1 The proposed revisions are meant to increase focus on appropriately defining and qualifying the services transaction to be tested prior to undertaking an economic analysis of an intercompany services transaction. This article will summarize the proposed revisions, with some commentary comparing the revised Guidelines to U.S. transfer pricing regulations.
Accurate Delineation, Rigorous Benefits Testing, & Total Services Cost
The revisions place greater emphasis on identifying the type of service performed, who performed the service, who benefited, and whether the arrangement reflects the parties’ actual conduct. The current Chapter VII of the Guidelines begins with an introduction and discussion of all aspects of defining the service transaction, including considerations related to the benefits provided to the recipient of the service. The proposed revisions add content focused on accurately delineating and defining the transaction in the context of the overall functional analysis, cautioning against presumptions with respect to benefits and methods of analysis, and describing different business arrangements and other factors that must be considered. These changes all help to better align the guidance in Chapter VII with other sections of the Guidelines that have also been revised in the post-Base Erosion and Profit Shifting rewrite.
Whereas the current Guidelines address benefits testing in section B.1 of Chapter VII, the proposed revisions detail approaches and considerations to benefits testing, as well as a deeper exploration of benefits testing. The benefits testing details include expanded guidance with respect to services that may not satisfy the benefits test—such as duplicative, incidental, or shareholder services. The proposal clarifies that shareholder activities, duplication, and incidental benefits are not separate analytical tests, but rather common outcomes of the benefit test and should not be considered chargeable to related parties. All of this content is additionally supported and clarified in a proposed annex to Chapter VII offering more than 20 examples demonstrating the principles therein.
Under the proposed revisions to the benefits test, taxpayers must demonstrate that the activity provided, or was reasonably expected to provide, economic or commercial value to the recipient at the time the activity was undertaken. By contrast, U.S. rules are generally applied in a manner that allows for greater reliance on actual outcomes and do not explicitly frame the benefit test as a distinct step within the broader delineation process. However, the emphasis on delineation and benefits testing in the proposed revisions better aligns with the U.S. regulations, as well as the earlier chapters of the Guidelines with respect to properly characterizing intercompany transactions in the context of the overall functional profiles of the entities and actual business dealings.
Direct vs. Indirect Charges
The proposal clarifies the use of direct and indirect charge approaches while maintaining a preference for direct charging when services can be clearly identified and reliably tracked. Indirect charging is permitted when direct charges are not possible, but the proposal places greater emphasis on ensuring that allocation keys reflect the expected benefit to each recipient, are based on reasonable and verifiable measures, and are consistently applied across recipients and over time. In addition, multiple allocation keys may be used within a cost base, provided they do not result in double counting of costs, and introduce a stronger expectation that taxpayers document why an indirect approach is used instead of a direct charge.
U.S. regulations do not prefer either a direct or indirect approach but instead would require that this context is considered during method selection under the best method rule of Treasury Regulations Section 1.482-1(c). In practice, when allocations are required, the U.S. regulations generally allow any mechanism of allocation that reasonably reflects economic substance, with less focus on documenting the choice between direct and indirect methods or demonstrating precise alignment of allocation keys to expected benefit.
Pricing Methods May Need More Support
Method selection continues to follow the general principles in Chapters I to III, with no single transfer pricing method preferred. While traditional methods such as Comparable Uncontrolled Price, Cost Plus (CP), and Transactional Net Margin Method remain applicable, the proposed revision cautions against defaulting to cost-based approaches. Instead, it highlights that more complex arrangements, particularly those involving intangibles, integrated activities, or shared risks, may require alternative approaches such as the transactional profit split method or a separation of service and intangible returns.
U.S. rules also require the selection of the method based on reliability and comparability and allows any reasonable method. However, in practice, cost-based methods such as CP are more commonly applied for routine services, with profit-based methods often used to corroborate findings. In practice, expect these approaches to align based on the quality and availability of data, as well as the actual contractual terms and business practices of the parties to the transaction—all of which should be determined by accurate delineation and alignment with benefits, as emphasized in the proposed revisions to Chapter VII.
Documentation Expectations Are Sharper
The proposal supplements the existing documentation guidance in the Guidelines’ Chapter V. It does not create a formal checklist but emphasizes the need for contemporaneous support for both the benefit test and pricing analysis. Relevant support may include service agreements, communications, approvals, deliverables, allocation calculations, cost base support, and evidence showing how the expected benefit was evaluated. Including more operational and real-time evidence—such as materials that demonstrate what activities were performed and why they were expected to provide value—may result in a higher practical documentation burden. These provisions have garnered significant focus, as they represent an expansion of existing requirements and may ultimately increase the documentation burden on taxpayers with intercompany services transactions.
The U.S. also requires documentation that supports the pricing of controlled transactions, but places greater focus on substantiating the selected transfer pricing method rather than explicitly documenting the existence of a service or the expected benefit.
How Forvis Mazars Can Help
The revised Chapter VII reinforces that documentation and audit readiness are increasingly central to supporting intra-group service charges. If approved “as is,” this likely means going beyond service agreements and allocation schedules and ensuring that service arrangements are supported by operational evidence, e.g., including contemporaneous communications, approvals, deliverables, etc., that demonstrate the expected business benefit.
In many cases, these expectations are already reflected in current audit activity and Mutual Agreement Procedures data. As a result, the proposed revisions are less a shift in direction and more a clear signal of where the OECD thinks audit scrutiny should intensify.
Forvis Mazars works with multinational groups to help evaluate intra-group service arrangements, strengthen transfer pricing support, and enhance audit readiness. This includes helping clients align documentation with evolving U.S. and OECD expectations, assess the defensibility of service charges, and address potential risks before they arise. To discuss how the proposed Chapter VII revisions may impact your service charge policies, documentation, or broader transfer pricing approach, please reach out to an advisor at Forvis Mazars.
- 1The foundational principles of Chapters I to III of the Guidelines define the arm’s-length standard, the transaction-based and profit-based transfer pricing methods, and the process of a comparability analysis to determine an arm’s-length range.