The Italian guidelines on the arm’s length principle need further clarification
THE ITALIAN GUIDELINES ON THE ARM’S LENGTH PRINCIPLE NEED FURTHER CLARIFICATION
The proposed draft Transfer Pricing guidelines released by the Italian Ministry of Economy and Finance (MEF) on 21 February 2018 fail to provide a clear guidance on how to evaluate whether the results stemming from the application of the transfer pricing methods are at arm’s length or not. Rather, we believe that some proposed guidance could create confusion and leave the taxpayer in uncertainty.
Our concerns relate to the following issues
The concepts of “control” and “dominant influence” are not clear
The wording used with regard to the financial indicator is misleading
The meaning of “aggregation of transactions” is to be defined
The “fair” position within the arm’s length range ought to be clarified
We provided our comments on 21 March 2018
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