Associated enterprise adjustments permit reallocation of profits where related party conditions distort arm's length outcomes, enabling tax corrections.

Associated enterprises provisions allow reallocation of profits where related party conditions differ from those between independent enterprises; such profits may be included in taxable income and taxed. Domestic tax laws may be applied, insofar as practicable consistent with the Article, when information is inadequate. If adjustments result in the same profits being taxed in both States, the first taxing State shall make an appropriate adjustment, with competent authorities consulting each other as necessary to resolve double taxation.

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