August 9, 2011
Transfer Pricing News — 2011 Report Card on CRA’s Mutual Agreement Program
adjustments going faster
transfer pricing cases resolved
According to the MAP report, the transactional net margin method is the dominant transfer pricing methodology used to resolve transfer pricing cases (43 out of 95 cases), followed by cost-plus (19 cases) and comparable uncontrolled price (CUP) (10 cases).
There were also more Canadian-initiated cases than in previous years. In 2010-2011, 88% cases were initiated in Canada compared to foreign territories, up from 81% in 2009-2010.
double taxation cases
The CRA also added three new sets of reasons to this year’s MAP Report to explain why relief from double taxation was not obtained:
· The other competent authority was unable to provide relief because of domestic statute-barred or administrative issues
· The taxpayer was unable to demonstrate that either Canada or its treaty partner undertook any action resulting in double tax or contravention of a tax treaty
· The taxpayer withdrew the request to the other competent authority and the CRA is unable to grant unilateral relief.
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