Almost all income tax treaties contain provisions equivalent to art. 9 of the OECD Model authorising the application of domestic transfer pricing rules. The Canadian Treaty, patterned on the OECD Model, reads as follows:

‘9(1) Where:

(a)an enterprise of one of the Contracting States participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

(b)the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the Contracting States and of an enterprise of the other Contracting State;

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