Associated enterprises: arm's length adjustments permit inclusion of diverted profits and require corresponding tax adjustment by the other state. Article 9 permits inclusion in taxable profits of amounts that would have accrued to an enterprise but for non arm's length conditions between associated enterprises where one enterprise participates in the management, control or capital of the other or where the same persons participate in both. It implements the arm's length principle by allowing reallocation of profits to reflect independent enterprise conditions. Where one State taxes such adjusted profits, the other State must make an appropriate corresponding tax adjustment, with competent authorities consulting as necessary to coordinate adjustments and respect the Agreement's provisions.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Associated enterprises: arm's length adjustments permit inclusion of diverted profits and require corresponding tax adjustment by the other state.
Article 9 permits inclusion in taxable profits of amounts that would have accrued to an enterprise but for non arm's length conditions between associated enterprises where one enterprise participates in the management, control or capital of the other or where the same persons participate in both. It implements the arm's length principle by allowing reallocation of profits to reflect independent enterprise conditions. Where one State taxes such adjusted profits, the other State must make an appropriate corresponding tax adjustment, with competent authorities consulting as necessary to coordinate adjustments and respect the Agreement's provisions.
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