8 Prospects for the ALP after BEPS

Subject(s):

Payment of price — Effects of trade practices — Contract formation and trade practices

This chapter considers whether ALP-based transfer pricing rules, as modified in connection with the BEPS work, satisfy the considerations previously discussed for a workable transfer pricing system. It concludes that further evolution will certainly be required if the ALP is to continue to play a central role in the tax system, although such evolution is problematic for several reasons. The chapter also remarks that the approach to the capital problem reflected in BEPS is inadequate and incomplete. Whether the ALP provides a workable response to the problems related to capital movements and capital allocations that exist in the current system is, according to this chapter, highly doubtful.