Arm's length principle and reference range in the OECD transfer pricing guidelines convention: a comparative study aimed at the net cost plus method
by João Ricardo Catarino; Ricardo de Moraes e Soares; Susana Sobral
International Journal of Public Law and Policy (IJPLAP), Vol. 9, No. 3, 2023

Abstract: For tax purposes, the terms on which they are agreed as international transactions between associated companies are at the heart of States concerns and have been the subject of study. States are fully aware that, in the absence of clear and precise rules, their own tax revenue is directly affected. In this study, we evaluated the scope of the general principle of full competition, recommended by the OECD, and its relationship with the concepts of full competition interval and full competition point, trying to determine the extent to which companies must prove that in their operations with each other they respected both the general principle and the OECD guidelines. The research problem is to understand whether companies belonging to the same economic group, when using the net cost plus method to determine whether they are complying with the arm's length principle established by the OECD in their internal economic transactions, may practice any price measure within the arm's length price range, or whether they should determine the price that, within that range, best reflects the value of the transaction.

Online publication date: Thu, 06-Jul-2023

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