Because transfer pricing is an inexact and extremely complex science, it is possible for the participants involved directly or indirectly in transfer pricing transactions to reach a different conclusion as to the arm's length consideration for a controlled transaction. Where the same transfer price is not accepted in all the tax jurisdictions involved, double taxation may occur. This is generally regarded as an undesirable outcome. Double taxation conflicts give rise to economic inefficiency - an impediment to trade. There are various avenues available for the resolution of transfer pricing disputes that arise between taxpayers and revenue authorities, and between different revenue authorities. One is the mutual agreement procedure (MAP) and corresponding adjustments; another is transfer pricing arbitration. This article will look at the latter option, focusing on the European Community Multilateral Transfer Pricing Convention.
© Copyright Kluwer Law International, 2005
- transfer pricing disputes,
- double taxation
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