Commentary on Sections Overview Overview Section 147: Tax calculations to be based on arm’s length, not actual, provision
312.This section gives the conditions necessary for the Part to apply (broadly where a transaction take place between two persons who meet the “participation condition” and that transaction differs from one at arm’s length) and the basic transfer pricing rule that the profits and losses should be computed as if the transaction had been at arm’s length. It is based on paragraphs 1(1) and (2), 9(1), 10 and 11(3) of Schedule 28AA to ICTA.
313.Paragraph 1(2) of Schedule 28AA makes the basic rule subject to paragraph 8 of the Schedule. Subsection (6)(e) and (f) recognise that paragraph 8 is rewritten in Parts 5 (loan relationships) and 7 (derivative contracts) of CTA 2009.