Tag: Transfer pricing

Transfer Pricing and the Arm’s Length Principle

A significant volume of global trade consists of international transfers of goods and services, capital and intangibles within MNE groups and thus between related parties. Transactions between related parties are referred to as “controlled” transactions, as distinct from “uncontrolled” transactions between independent companies. The forces that regulate pricing of transactions between independent parties are known as “marked forces”. Independent parties can be assumed to operate in their own self-interest (“on an arm’s length basis”) in […]

TPG2017 Preface paragraph 12

Transfer prices are significant for both taxpayers and tax administrations because they determine in large part the income and expenses, and therefore taxable profits, of associated enterprises in different tax jurisdictions. Transfer pricing issues originally arose in transactions between associated enterprises operating within the same tax jurisdiction. The domestic issues are not considered in these Guidelines, which focus on the international aspects of transfer pricing. These international aspects are more difficult to deal with because […]

TPG2017 Preface paragraph 11

In applying the foregoing principles to the taxation of MNEs, one of the most difficult issues that has arisen is the establishment for tax purposes of appropriate transfer prices. Transfer prices are the prices at which an enterprise transfers physical goods and intangible property or provides services to associated enterprises. For purposes of these Guidelines, an “associated enterprise” is an enterprise that satisfies the conditions set forth in Article 9, sub-paragraphs 1a) and 1b) of […]