Transfer Pricing Regulations in Canada

Transfer pricing regulations are existent in Canada in order to prevent the overstatement of deductions and the understatement of revenues for the sake of reducing income taxes. Transfer pricing, which is connected to electronic business taxation, is motivated by similar principles as transfer pricing for “bricks and mortar” businesses. Every Canadian endeavor that conducts transactions with related foreign parties should be concerned about transfer pricing, which includes the Canadian subsidiaries of foreign corporations or the Canadian companies with its subsidiaries abroad.

The following questions have been addressed in this article:

Why are transfer pricing regulations required in Canada?
What is the legal structure of Section 247 of the Income Tax Act?
What is an “arm’s length transfer price”?
How does the Canada Revenue Agency supervise the transfer pricing issues?


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