Domestic related-party transfer pricing is ordinarily revenue...

Domestic related-party transfer pricing is ordinarily revenue neutral where under-invoicing or over-invoicing does not create a tax advantage. Revenue neutrality may not apply where profits shift from a profit-making entity to a loss-making entity, or from a higher-taxed entity to a lower-taxed entity. Interest paid on a loan was examined where the borrower was subject to a lower concessional tax rate than the associated enterprise; shifting profit to the higher-taxed enterprise would not yield a tax benefit. Verification was required to establish whether the associated enterprise was domestic and the loan constituted a specified domestic transaction. If verified, the interest transfer pricing adjustment was to be deleted.