TRANSFER PRICING IN AUSTRALIA: THE ARM'S LENGTH PRINCIPLE & PAPERWORK REQUIREMENTSTransfer pricing measures the stipulated market value at which the divisions of a single corporation trade with each other. Such transactions might include selling supplies or labor between sister companies' departments. A precursor assumption is that the individual entities of such larger multi-entities are classed as separately run concerns. Given the potential for error in valuing these inter-company transactions, the governments of most countries look closely at such trades, especially if they involve large sums, or transpire between the components of large-multinational corporations.
The following questions have been addressed in this article:What is the Arm's Length Principle?
What are the Acceptable Arm's Length Methodologies?
What Documentation for the Arm's Length Principle is Required?
What is the Schedule 25A Requirement?