The Arm's Length Standard and Tax Justice : Reflections on the Present and the Future of Transfer Pricing Articles uri icon



publication date

  • June 2018

start page

  • 351

end page

  • 379


  • 3


  • 10

International Standard Serial Number (ISSN)

  • 1878-4917


  • The aim of this contribution is to analyse the arm's length standard from a tax justice perspective so as to determine the proper breadth of the fiction it imposes. To that end, an interpretative solution is proposed to minimize negative outcomes derived from the alleged shortcomings of the mentioned standard that mainly arise due to the fact that MNEs do not operate in markets as independent parties do. Although the proposal may seem rather theoretical or abstract, practical implications may be derived from it in diverse matters within transfer pricing, e.g. on the recognition of profits derived from active and passive association, on how synergistic gains should be split, on the scope of transactional adjustments and on the fostering of two-sided analysis. In fact, the proposal may serve to provide a sound and strong theoretical basis to encourage the proposals discussed within the BEPS Project.