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ARTICLE · 09 AUGUST 2011

Transfer Pricing: Key To Higher Profit In Canada

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Optimizing the opportunities for Indian companies in Canada should include planning to minimize income tax, customs duties, and value-added taxes.

CanadaTax
Claire Kennedy
Claire Kennedy
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Previously published in India Business Law Journal, June 2011

Optimizing the opportunities for Indian companies in Canada should include planning to minimize income tax, customs duties, and value-added taxes.

How does one maximize "after-tax/duty" income? And how do Indian companies defend their tax and customs positions from encroachment by government tax and customs authorities? These vital questions should be addressed at the early stages of implementation of trade and investment strategies with a proactive, unified approach to tax and customs transfer pricing.

The arm's length principle

Transfer pricing in Canada is guided by the principle that cross-border related party transactions must occur on arm's length terms. Under Canadian law, the arm's length principle extends to all related party cross-border dealings, including in goods, services and intellectual property (licensing). The onus is on the related parties to determine and use arm's

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