Global

Details

  • Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 9/12/2012

Canada - Supreme Court expected to clarify related-party transfer prices 

October 18: The Supreme Court of Canada today issued its decision in the GlaxoSmithKline case.


September 12: Canadian taxpayers that conduct cross-border related-party transactions are eagerly awaiting the Supreme Court of Canada's decision in a transfer pricing case—The Queen v. GlaxoSmithKline Inc.

The Supreme Court of Canada (SCC) heard the case on 13 January 2012, and is expected to render its judgment soon.


Taxpayers and tax professionals alike hope that the decision, when delivered, will provide guidance on interpreting and applying Canada's transfer pricing law.


Although the SCC decision is unlikely to advise what the precise arm's length price is in the pending matter, the decision will hopefully provide direction and guidance on how an arm's length transfer price is determined.


Specifically, in determining the transfer pricing of a transaction:


  • Does one consider all circumstances and apply the reasonable business person test, from the perspective of the taxpayer? In other words, what is the arm’s length price?
  • Does one ignore the surrounding circumstances of the transaction, and essentially evaluate the transaction on a standalone basis and establish the price to be the open market price? In other words:
    • What are the economically significant factors and circumstances surrounding the transaction?
    • Given these factors, what is a price parties dealing at arm's length would agree to?

Read a September 2012 report prepared by the KPMG member firm in Canada: GlaxoSmithKline Transfer Pricing Decision - What's at Stake?



Contact a tax professional with KPMG's Global Transfer Pricing Services.




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