Tuesday, June 5, 2018

DEMPE is not complicated – It is simply IP substance

For those who cared then, there was a lot of panic when the first drafts of the OECD BEPS (base erosion and profit shifting) action items were circulated.

The Action Plan had implications that were not limited to taxation and economic development. In later drafts it became more evident that intellectual property would receive extensive attention. Action Items 8 to 10 address the aspects of intangible assets with respect to preventing base erosion and profit shifting.

Make no mistake – the OECD BEPS action plan is not easy to read. However, while it takes a lot of dedication to wade through the final version, Action Items 8 to 10 are simply a handbook for prudent IP management. The DEMPE (development, enhancement, maintenance, protection and exploitation) approach is a practical framework on how to assess alignment of IP ownership with the associated value-creating activities.

The easiest way to achieve this alignment is to follow the traditional approach of building IP substance in the same locations as the ownership of IP. Rather than viewing it as a tax-compliance chore, firms should see this as an opportunity to enhance intangible value sustainably in key geographic markets.

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