Latest OECD Country Profiles / Blume Adjustment

OECD publishes new Country Profiles

On 13 December, the OECD updated 18 of its Transfer Pricing Country Profiles and published new profiles for 3 countries.  The updated profiles include large and globally connected economies such as Germany, Italy, and Singapore, while the 3 new profiles cover Albania, Kenya, and the Maldives.  The OECD’s Transfer Pricing Country Profiles are based on questionnaires that the OECD uses to obtain replies from the respective tax administrations and cover aspects such as core elements of the domestic legislation on transfer pricing, approaches of the tax administrations to different types of controlled transactions, and documentation requirements in a consistent format.  They provide valuation professionals with a valuable source when evaluating special requirements under domestic regulations.

The Transfer Pricing Country Profiles are available on the website of the OECD here: https://www.oecd.org/tax/transfer-pricing/transfer-pricing-country-profiles.htm

Critique of the Blume Adjustment

On 15 November, professor Maitner of the International School of Management, Dortmund published a white paper on the beta adjustment according to Blume.  This Blume-beta, commonly simply called the “adjusted beta”, considers the empirically observed regression to the mean – the development of betas higher or lower than the market average to a value more closely to this average over time.  Marschall Blume, a professor for finance at the University of Pennsylvania, provided the research basis for this in the 1970s.  Professor Maitner examines the problems that arise from the conceptual approach taken by Blume under the cut-off date principle required for expert opinions under German regulations.

The white paper can be accessed on SSRN here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3963626