Arm's length principle permits reallocating profits between associated enterprises to reflect independent party outcomes. Where enterprises are related by participation in management, control or capital, or by common persons, and conditions between them differ from those ... Summary
Arm's length principle permits reallocating profits between associated enterprises to reflect independent party outcomes.
Where enterprises are related by participation in management, control or capital, or by common persons, and conditions between them differ from those between independent enterprises, any profits that would have accrued under independent conditions but did not because of those conditions may be included in the profits of the enterprise and taxed accordingly; this functions as a transfer pricing mechanism to align taxable income with outcomes under the arm's length principle.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.