Who can initiate the transfer pricing adjustments?
Yes, Transfer Pricing adjustments can be initiated by both Taxable Persons and the FTA in cases where it is believed that a transaction has not been conducted in an arm’s length manner. Where the FTA or a Taxable Person adjusts the Taxable Income for a transaction or arrangement to meet the arm’s length standard, the FTA will reflect this adjustment in the Taxable Income of the local Related Party that is party to the relevant transaction or arrangement. In cases where the application of the Arm’s Length Principle results in an transfer pricing adjustment made by a foreign competent authority, the Taxable Person can request the FTA to make a corresponding adjustment to their Taxable Income under the applicable provisions of the relevant Double Taxation Agreement. The FTA will review the foreign tax authority’s position and where appropriate may proceed with a corresponding adjustment.
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