Key Transfer Pricing Takeaways From ExxonMobil

The Tax Court of Canada recently released a detailed transfer pricing decision in ExxonMobil Canada Resources Company v. His Majesty the King (ExxonMobil). That decision relies on a range of principles developed in Canadian transfer pricing jurisprudence. Here are five key takeaways from ExxonMobil:

1. The  OECDguidelines  are a  “widely accepted interpretive aid” but  are  not  “controlling.” The Court acknowledged thatthe guidelines do not have the authoritative power of a statute. However, the Court ultimately gave “very limited weight” to the evidence given by the Crown’s expert, in part, because he failed to “properly apply” them. As proposed to be amended, section 247 of the Income Tax Act would formalize the role of the guidelines on a go-forward basis, but this case reflects their general use under the current legislation.