Arm's length price

Arm's length price

The price at which a willing buyer and a willing unrelated seller would freely agree to transact or a trade between related parties that is conducted as if they were unrelated, so that there is no conflict of interest in the transaction.
References in periodicals archive ?
Since intercompany pricing should reflect arm's length pricing, and true arm's length pricing is shaped by particular market forces at a particular time, a full understanding of an arm's length price requires a full understanding of the market forces and how they may shape the price for a given transaction at a certain point in time.
Hence, the concept of arm's length price is not applicable in case of issue of shares.
The law needs that goods and services be sold to subsidiaries by parent companies at arm's length price, the price at which goods are traded between unconnected companies.
Similarly, taxpayers may seek an Advance Pricing Agreement (APA) to determine the arm's length price of a transaction upfront, helping to understand their tax liability and consequently mitigating tax litigation at a later stage.
Under current production sharing contracts, a contractor is required to discover an arm's length price of gas by calling bids from prospective users.
Transfer pricing involves the pricing of transactions between related parties to be conducted at a market rate, often referred to as an arm's length price.
Given the difficulties of determining an arm's length price and the cost of information sharing and tax adjustments among diverse Tax Administrations, it is essential to reconsider the underlying first principles of transfer pricing rules with a view toward their revision, if not elimination.
That resale price is reduced for gross margin and eventually corrected for the costs associated with the purchase of the product, thus the balance incurred is the arm's length price.
The idea is that an arm's length price will result in a more equitable distribution of profits between the buying and selling divisions.
The proposed regulations provide guidance on the transfer pricing methods to be used to determine the arm's length price in a services transaction.
The transfer pricing changes incorporated in the budget propose that the 5% range benefit would be available only if the arm's length price falls within +/-5% range of the transfer price," said Nair & Co.
An attempt to recreate a "perfect" comparable in pursuit of the arm's length principle may lead to simulating a non-existent product or market that deviates substantially from the arm's length price in a manner that is more drastic than simply using industry averages.