Arm's length price rules require method selection, averaging and a tolerance for deeming actual transaction price; safe harbour applies.

Computation of the arm's length price for international transactions must use the prescribed most appropriate method, chosen by reference to transaction nature, associated enterprise class, and functions performed; application follows prescribed procedure. A single price from the method is the arm's length price, multiple prices are averaged. The actual transaction price is deemed arm's length if within a prescribed tolerance of the computed price. One enterprise's arm's length determination shall not cause recomputation of another's income. Enhanced income following this computation is not deductible under sub chapter I of Chapter III. Determination is subject to Board framed safe harbour rules.

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