Transfer Pricing – Enabling Provision

The Budget Measures Implementation Act has introduced an enabling provision in the Income Tax Act which empowers the Minister of Finance to enact rules in relation to transfer pricing. The new article 51 of the Income Tax Act states that such rules may provide for the application of the arm’s length principle and therefore the determination of an arm’s length price of a transaction or a series of transactions. It also provides for any adjustments in relation to such transaction/s as well as for advance pricing agreements.