Associated enterprise pricing adjustments allow inclusion of shifted profits for taxation and require reciprocal tax adjustment subject to limitation. Where related enterprises have conditions differing from those between independent enterprises, profits that would have accrued but for those conditions may be included in and taxed in the enterprise to which they would have accrued under the arm's length principle. If one State taxes such adjusted profits, the other State shall make an appropriate adjustment to avoid double taxation, with competent authorities consulting as necessary, subject to the taxing State's statute of limitations.
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 enterprise pricing adjustments allow inclusion of shifted profits for taxation and require reciprocal tax adjustment subject to limitation.
Where related enterprises have conditions differing from those between independent enterprises, profits that would have accrued but for those conditions may be included in and taxed in the enterprise to which they would have accrued under the arm's length principle. If one State taxes such adjusted profits, the other State shall make an appropriate adjustment to avoid double taxation, with competent authorities consulting as necessary, subject to the taxing State's statute of limitations.
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