Providing Crossborder Inter-Company Goods Or Services? Don't Forget About Transfer Pricing!

In the transportation and logistics industry, as with other industries, it is common for corporations in the same multinational group to provide goods and services to one another. If the parties to such a transaction include a Canadian taxpayer (for Canadian income tax purposes) and a non-resident person (such as a corporation), and the parties do not deal with each other at arm's length, the Canadian transfer pricing rules must be considered. Many jurisdictions, including Canada, have adopted robust transfer pricing rules in an effort to ensure that the appropriate amount of profits are reported in the applicable jurisdictions. If there is non-compliance with the Canadian transfer pricing rules, there can be significant penalties.