What is an Arm's Length Transaction?
Also known as the "fair and independent principle", "fair transaction principle", "normal transaction principle", etc., refer to completely independent and unconnected enterprises or individuals who deal with each other according to the valuation standards or prices adopted under market conditions The principle of distribution between income and expenses. The principle of independent transactions has been accepted and adopted by most countries in the world, and has become the guiding principle for tax authorities to handle the distribution of income and expenses between affiliated enterprises.
Independent transaction principle
Right!
- Chinese name
- Independent transaction principle
- Also known as
- Fair trade principle
- in accordance with
- Cost allocation principle
- Guiding Principles
- Independent transaction principle
- Also known as the "fair and independent principle", "fair transaction principle", "normal transaction principle", etc., refer to completely independent and unconnected enterprises or individuals who deal with each other according to the valuation standards or prices adopted under market conditions The principle of distribution between income and expenses. The principle of independent transactions has been accepted and adopted by most countries in the world, and has become the guiding principle for tax authorities to handle the distribution of income and expenses between affiliated enterprises.
- Independent transaction principle
- The United States introduced the transfer pricing system in 1917, but it was not until 1935 that rules were formulated to set the principle of normal transactions as the basic principle of the transfer pricing system. The OECD model tax treaty of 1977 adopted the principle of normal transactions in Article 7 "Operating Profits" and Article 9 "Affiliated Enterprises". So far, the principle of normal transactions has been accepted by all OECD member countries and almost all other industrial developed countries and most developing countries. Regarding the concept of the principle of normal transactions, countries or related organizations have not given a definitive statement.