Canada's "Glaxo" Ruling Provides Transfer Pricing Guidance

The Supreme Court of Canada (SCC) on October 18 released its unanimous decision in GlaxoSmithKline Inc. v. The Queen, 2012 SCC 52, which provides guidance on the Canadian transfer pricing rules. Although the transfer pricing provisions in Canada's Income Tax Act have changed since the years at issue in this case, GlaxoSmithKline is nevertheless expected to have a major influence on the interpretation and application of Canada's transfer pricing rules. In a nutshell, the SCC has confirmed a broadening of the economic circumstances that can be considered in determining an appropriate transfer price between non-arm's-length parties. (For the text of the SCC's judgment, see Doc 2012- 21575 or 2012 WTD 203-16.)