Arm's length principle allows adjusting and taxing profits between associated enterprises, with corresponding tax adjustments permitted. Where enterprises of the Contracting States are associated through participation in management, control or capital and transact on conditions differing from independent enterprises, profits that would have accrued absent those conditions may be included in taxable profits and taxed under the arm's length principle. If one State taxes such included profits, the other State may make an appropriate corresponding adjustment, having regard to the Agreement and following consultation between the competent authorities as necessary.
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.
Arm's length principle allows adjusting and taxing profits between associated enterprises, with corresponding tax adjustments permitted.
Where enterprises of the Contracting States are associated through participation in management, control or capital and transact on conditions differing from independent enterprises, profits that would have accrued absent those conditions may be included in taxable profits and taxed under the arm's length principle. If one State taxes such included profits, the other State may make an appropriate corresponding adjustment, having regard to the Agreement and following consultation between the competent authorities as necessary.
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