Transfer pricing adjustments for associated enterprises require corresponding tax adjustments by the other treaty state. Article 9 permits inclusion in taxable profits where associated enterprises impose non-arm's-length conditions that shift profits; profits that would have accrued but for those conditions may be taxed accordingly. When one State taxes such adjusted profits, the other State shall make an appropriate corresponding adjustment, with competent authorities consulting as necessary, except where final proceedings have established penalty liability for fraud, gross negligence or wilful default.
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.
Transfer pricing adjustments for associated enterprises require corresponding tax adjustments by the other treaty state.
Article 9 permits inclusion in taxable profits where associated enterprises impose non-arm's-length conditions that shift profits; profits that would have accrued but for those conditions may be taxed accordingly. When one State taxes such adjusted profits, the other State shall make an appropriate corresponding adjustment, with competent authorities consulting as necessary, except where final proceedings have established penalty liability for fraud, gross negligence or wilful default.
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