§ Lord BROCKWAYasked Her Majesty's Government:
What is their response to the recommendation of the OECD Committee on Fiscal Affairs that multinational companies should be taxed in relation to transfer pricing on the same basis as unrelated enterprises in similar circumstances.
§ Lord COCKFIELDThe United Kingdom tax law already contains provisions enabling the transfer prices used in transactions between United Kingdom resident companies and their non-resident affiliates to be adjusted, for the purpose of calculating their taxable profits, to the prices which would have been used by independent enterprises acting at arm's length. These provisions are contained in Section 485 of the Income and Corporation Taxes Act 1970. The endorsement of this arm's length principle in the recent report of the OECD Committee on Fiscal Affairs entitled,Taxation and Multinational Companies, is therefore consonant with the long-established policy of Her Majesty's Government.