Transfer pricing

 

Transfer pricing is defined as the pricing of transactions between related persons or persons under common control (“Controlled Transactions”). The importance of Transfer Pricing Bylaws lies in the necessity to implement and enforce the Arm’s Length Principle on transactions between related persons or persons under common control as if they were conducted between independent persons.


The arm’s length principle must be the basis for pricing all transactions between related persons or persons under common control. The Bylaws defines the Arm’s Length Principle as: “where conditions are made or imposed between two or more related persons in their commercial or financial relations which differ from those which would be made between unrelated persons, then any profits which would, but for those conditions, have accrued to one of such Related Persons, but, by reasons of those conditions, have not so accrued, may be included in the profits of that person and taxed accordingly”.


The Bylaws address situations in which the conditions made or imposed between two or more related persons in their commercial or financial relations differ from those made between independent persons if the same transaction took place. For income tax purposes, the income that would have been accrued if the conditions imposed were the same as those which would be made between independent persons should be included in the tax base of the related persons. 


The Transfer Pricing Bylaws is available on the following link : Transfer pricing bylaws

Note: The time allowed to submit Master File and Local File documents will be extended for 60 days during 2019.

For more details, you can find the most FAQs about transfer pricing on the FAQ page at the following link : FAQ's