When setting aside a provision may be appropriate

Normally, a transfer pricing examination will involve identifying the actual provision made or imposed between associated persons through the process of accurate delineation of the actual transaction (see INTM485021-485024 ), then comparing that transaction with comparable transactions between independent parties in order to ascertain whether that provision has been priced at an arm's length price.

Guidance is given in the OECD's Transfer Pricing Guidelines at paragraphs 1.119 to 1.128 as to the circumstances where, in applying the arm's length principle, it may be appropriate to disregard the accurately delineated transaction.

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