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Transfer Pricing and the Arm's Length Principle After BEPS by Collier, Richard; Andrus, Joseph L (17th August 2017)

2 The Development of the ALP

Richard S Collier, Joseph L Andrus

From: Transfer Pricing and the Arm's Length Principle After BEPS

Richard Collier, Joseph L Andrus

Subject(s):
Formation of contract — Interpretation of contract — Payment of price

This chapter traces the evolution of the ALP since its original adoption in the 1920s and 1930s. In very broad terms, the stages of its evolution may be characterised as involving four distinct phases. The period prior to 1968 was a period in which the primacy of the ALP as an income allocation tool was established. Next, the period from the mid-1960s to the mid-1980s represented a sharp corrective to the position of complacency, and it was in this period that the emphasis shifted to a highly detailed elaboration of transactional pricing. In the period from the mid-1980s, that detailed transactional pricing approach was taken further, and some of the perceived fundamental difficulties arising from that approach began to be addressed. Finally, the period since 1995 has been characterised by the proliferation across the globe of highly detailed compliance regimes relating to transfer pricing and by increasingly difficult issues.

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