Associated enterprises rule permits profit adjustments for non arm's length related party dealings and requires reciprocal tax adjustment. Article 9 permits inclusion in taxable profits where conditions between related cross border enterprises differ from those between independent enterprises, allowing profits that would have accrued but for those conditions to be taxed. If one Contracting State taxes such adjusted profits, the other State must make an appropriate tax adjustment and the competent authorities shall consult, taking into account other provisions of the Agreement, thereby applying the arm's length principle and coordinating to avoid double taxation from transfer pricing adjustments.
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 rule permits profit adjustments for non arm's length related party dealings and requires reciprocal tax adjustment.
Article 9 permits inclusion in taxable profits where conditions between related cross border enterprises differ from those between independent enterprises, allowing profits that would have accrued but for those conditions to be taxed. If one Contracting State taxes such adjusted profits, the other State must make an appropriate tax adjustment and the competent authorities shall consult, taking into account other provisions of the Agreement, thereby applying the arm's length principle and coordinating to avoid double taxation from transfer pricing adjustments.
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