The object of the transfer pricing regulations is to tax the foreign enterprise on profits determined on the basis of an arm's length price
in respect of such transaction.
determine Arm's Length price
. (144) However, the OECD has now
With some of the UAPAs having rollback provisions, the APA Scheme endeavors to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the Arm's Length Price
of international transactions in advance for a maximum period of five future years.
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.
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
. Transfer pricing rules are intended to prevent companies from using intercompany pricing as a means of evading taxes by inflating or deflating the profits of a particular entity.
The landlord has to demonstrate what the honest arm's length price
of the building if fully repaired would be if compared to the cost of the repairs.
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.