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

4 Practical and Theoretical Problems Encountered in Applying the Arm’s Length Principle

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 — Performance of contract

This chapter examines in greater detail several of the alleged shortcomings of transfer pricing rules based on the ALP. Critics of the ALP argue that various aspects of the ALP cause the existing transfer pricing rules to fall short of the objective of providing a clear and efficient means for accurately allocating income among members of a multi-national enterprise (MNE) group. Such problems, this chapter argues, fall into three categories. A first set of issues involves matters that are conceptual in nature. Next are the problems that are entirely practical in nature. Finally, there is a set of challenging treaty interpretation issues regarding the scope and purpose of Article 9 of the OECD Guidelines and the ALP.

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