Associated enterprises principle allows transfer pricing adjustments where intercompany terms differ from independent dealings and mandates reciprocal tax adjustment.

When enterprises in the two Contracting States are related and conditions between them differ from those between independent enterprises, profits that would have accrued but for those conditions may be included in taxable profits and taxed to reflect an arm's length outcome. Where one State taxes such adjusted profits already taxed in the other State, that other State shall make an appropriate adjustment, with due regard to the Agreement and consultation between the competent authorities.

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