Transfer pricing represents the value of the goods and services traded between subsidiaries of the same organization that are located in different countries. This is an essential consideration that has a direct impact on taxes payable.
To preserve businesses’ competitiveness and prevent tax evasion, Canada applies OECD principles:
- Transfer pricing must reflect market conditions—i.e., prices must be comparable to what two similar independent companies would charge.
- In cases where there is no equivalent market, the calculation methods developed by the OECD must be used.
- Businesses must provide documentation to demonstrate that their taxable income is not transferred artificially to another country.
If necessary, Montréal International can help you find qualified specialists who can work with you to analyze technical tax considerations.