The ‘capital allocation’ approach of TIOPA10/S43 and the ‘thin capitalisation’ approach of Chapter 4 of Part 2 CTA09 are the two methodologies authorised by the OECD for attributing capital to PEs in the OECD Report on the Attribution of Profits to Permanent Establishment (‘the Report’) to establish an arm's length result. The 2010 version of the Report can be viewed on the OECD website at:http://www.oecd.org/ctp/transfer-pricing/45689524.pdf.

The capital allocation approach is discussed in the Report, including in the contexts of:

General considerations – at Part I Section D-2 (v) (b) (3) (from page 37);

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