Ashley Greenbank (Macfarlanes) considers the proposals for the introduction of further adjustments to counteract the financial benefits of cash flows arising from non-arm’s length transfer pricing.
What is a secondary adjustment?
This is perhaps best explained by a simple example. The example given in the consultation paper is as follows:
Company A is a resident in the UK and has paid £10m for products supplied to it by Company B a connected overseas company. The arm’s length price for the products is £8m.
The UK’s transfer pricing rules apply to substitute the arm’s length price (£8m) for the price that Company A has paid (£10m).
Under the UK’s transfer pricing rules for corporation tax purposes Company A makes an adjustment in computing its profits by reducing the...
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Ashley Greenbank (Macfarlanes) considers the proposals for the introduction of further adjustments to counteract the financial benefits of cash flows arising from non-arm’s length transfer pricing.
What is a secondary adjustment?
This is perhaps best explained by a simple example. The example given in the consultation paper is as follows:
Company A is a resident in the UK and has paid £10m for products supplied to it by Company B a connected overseas company. The arm’s length price for the products is £8m.
The UK’s transfer pricing rules apply to substitute the arm’s length price (£8m) for the price that Company A has paid (£10m).
Under the UK’s transfer pricing rules for corporation tax purposes Company A makes an adjustment in computing its profits by reducing the...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
