Tax Pros Uneasy as Canada Applies Draft Transfer Pricing Rules

The Canada Revenue Agency’s enforcement of a draft transfer pricing rewrite is leaving tax professionals wrestling with ambiguities, they say, as legislation for the revamp remains stalled.

Applying “economic substance” examination during an audit or dispute resolution, as proposed in the draft, is one practice that pros call disturbing because the provisions for it need clarification.

They say the Finance Department, which proposed the overhaul two years ago, should release new proposals that address ambiguities in the package of measures for regulating transfer pricing, the valuation of transactions within a corporate group for tax purposes.

Canada, like many countries, requires ...