Associated enterprises: non-arm's-length conditions permit reallocation of unrealised profits and corresponding taxation under treaty rules.

Where enterprises are related by direct or indirect participation in management, control or capital, or by common persons, commercial or financial conditions between them that differ from those between independent enterprises permit tax authorities to include in an enterprise's taxable profits any profits that would have accrued but for those non-arm's-length conditions, and to tax them accordingly; this functions as a transfer pricing mechanism to realign profits to an arm's length result.

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