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Glaxosmithkline: Transfer Pricing Law in Canada Clarified for Cross-Border Investors  

Author:  Lorne H.  Saltman.

Source: Volume 28, Number 02, Winter 2011 , pp.61-71(11)

Journal of Taxation of Investments

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In the recent Glaxosmithkline transfer pricing case, the Canadian Federal Court of Appeal established a realistic framework for applying the abstract rules promulgated by the OECD, by requiring an analysis of the taxpayer’s relevant circumstances, including the legal, financial, commercial and contractual circumstances that any arm’s length person “standing in the shoes of the taxpayer” would face in its economic relations with the relevant cross-border related parties. Although this case did not happen to involve a U.S. entity, given the extent of U.S.-Canada business investment—not to mention the ever-increasing exposure to transfer pricing adjustments in cross-border business transactions generally—U.S. taxpayers should find the analysis of great interest.

Keywords: international transfer pricing, cross-border licensing, resale price method, Glaxosmithkline v. The Queen

Affiliations:  1: Cassels Brock & Blackwell LLP.

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