Associated enterprises rule permits profit reallocation where related-party conditions depart from arm's length terms, prompting reciprocal tax adjustments. Article 9 treats enterprises as associated enterprises where direct or indirect participation in management, control or capital, or common persons' participation, leads to commercial or financial conditions differing from arm's length terms; profits that would have accrued but for such conditions may be included in and taxed as the profits of the affected enterprise. Where one State includes and taxes such reallocated profits, the other State shall make an appropriate adjustment to its tax if it considers the adjustment justified, with due regard to the Convention and consultation between competent authorities.
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 reallocation where related-party conditions depart from arm's length terms, prompting reciprocal tax adjustments.
Article 9 treats enterprises as associated enterprises where direct or indirect participation in management, control or capital, or common persons' participation, leads to commercial or financial conditions differing from arm's length terms; profits that would have accrued but for such conditions may be included in and taxed as the profits of the affected enterprise. Where one State includes and taxes such reallocated profits, the other State shall make an appropriate adjustment to its tax if it considers the adjustment justified, with due regard to the Convention and consultation between competent authorities.
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