In the absence of an arbitration decision arrived at pursuant to an arbitration procedure comparable to that provided for under paragraph 5 of Article 25 which provides for a corresponding adjustment, corresponding adjustments are not mandatory, mirroring the rule that tax administrations are not obliged to reach agreement under the mutual agreement procedure. Under paragraph 2 of Article 9, a tax administration should make a corresponding adjustment only insofar as it considers the primary adjustment to be justified both in principle and in amount. The non- mandatory nature of corresponding adjustments is necessary so that one tax administration is not forced to accept the consequences of an arbitrary or capricious adjustment by another State. It also is important to maintaining the fiscal sovereignty of each OECD member country.
TPG2017 Chapter IV paragraph 4.35
Category: C. Corresponding adjustments and the mutual agreement procedure: Article 9 and 25 of the OECD MTC, OECD Transfer Pricing Guidelines (2017), TPG2017 Chapter IV: Administrative Dispute Resolution | Tag: Corresponding adjustment, Mutual agreement procedure (MAP)
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Next » Related Guidelines
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Related Case Law
- Spain vs EPSON IBÉRICA S.A.U., March 2021, Supreme Court, Case No 390:2021The SEIKO EPSON CORPORATION is a multinational group of Japanese origin active in among others areas, production and sale of computer products. The group is present in Spain, EPSON IBÉRICA, but has its European HQ in the Netherlands, EPSON EUROPE BV. The main...