Canada vs. Marzen Artistic Aluminum. January 2016

Category: Sales and Marketing Hubs, Transfer Pricing Methods | Tag: , , , , , ,
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The intercompany transactions at issue involved fees paid to the company’s wholly-owned Barbados based subsidiary during taxation years 2000 and 2001 for sales, marketing and support services.

The Tax Court of Canada had determined that it was appropriate to apply the CUP method rather than the TNMM, which was advocated by the company’s expert.

Canada’s Federal Court of Appeal upheld the decision by the Tax Court of Canada, which in 2014 ruled that the Canada Revenue Agency had largely been correct in reassessing the taxable income of Marzen Artistic Aluminum Ltd.

 

Canada vs Marzen-v-the-Queen






Related Guidelines

  1. TPG2022 Chapter VI paragraph 6.145The transfer pricing methods most likely to prove useful in matters involving transfers of one or more intangibles are the CUP method and the transactional profit split method. Valuation techniques can be useful tools. Supplemental guidance on the transfer pricing methods most likely...
  2. TPG2022 Chapter II paragraph 2.98Cost-based indicators should only be used in those cases where costs are a relevant indicator of the value of the functions performed, assets used and risks assumed by the tested party. In addition, the determination of what costs should be included in the...
  3. TPG2022 Chapter II Annex I paragraph 4Consequently, enterprises performing different functions may have a wide range of gross profit margins while still earning broadly similar levels of net profits. For instance, business commentators note that the transactional net margin method would be less sensitive to differences in volume, extent...
  1. New Zealand introduces Group Rating Approach for certain Cross-Border relatet party Borrowing and Debt ArrangementsThe OECD’s final report on interest limitation rules notes that thin capitalisation rules are vulnerable to loans with excessive interest rates and many transfer pricing practitioners finds that transfer pricing may not the most effective way to prevent profit-shifting using high-priced related party...
  2. OECD’s Manual on Effective Mutual Agreement Procedures (MEMAP)The OECD Manual on Effective Mutual Agreement Procedures (MEMAP) is part of a broader project to improve the functioning of existing international tax dispute procedures and to develop supplementary dispute resolution mechanisms. More information about the project, the proposed supplementary dispute resolution mechanism,...

Related Case Law

  1. Ukrain vs PJSC “Azot”, March 2019, Administrative Court of Appeal, Case No 826/17841/17Azot is a producer of mineral fertilizers and one of the largest industrial groups in Ukraine. Following an audit the tax authorities concluded that Azot’s export of mineral fertilizers to a related party in Switzerland, NF Trading AG, had been priced significantly below...
  2. Australia vs Rio Tinto and BHP Billiton, April 2017 – Going to CourtSingapore marketing hubs are being used by large multinational companies — and billions of dollars in related-party transactions that are being funnelled through the hubs each year. The Australian Tax Office has issued claims of substantial unpaid taxes to mining giants Rio Tinto...
  3. Spain vs Tomas Bodero, S.A., July 2023, Tribunal Superior de Justicia, Case No STSJ CL 3218/2023Tomas Bodero S.A. added a 4% fee when re-invoicing goods purchased from unrelated manufacturers to its Panamanian subsidiary. The transfer pricing documentation stated that “this fee (4%) is very similar to the fee that brokers in the sector usually charge for brokering imports...
  4. France vs (SAS) SKF Holding France, October 2021, Conseil d’Etat, Case No. 443133RKS, whose business consists of the manufacture of very large custom bearings for the civil and military industries, is controlled by the Swedish group SKF through  (SAS) SKF Holding France. RKS was subject to a tax audit for FY 2009 and 2010, at...