Multinational enterprises should review new Finance consultations and proposals that could affect their transfer pricing policies. Finance recently released a consultation paper and accompanying legislative proposals that include potentially significant changes to the Canadian transfer pricing rules, including amendments to the transfer pricing adjustment rule and possible revisions to certain administrative practices. The consultation paper, which includes a series of questions for public comment, notes that these proposals are intended to provide more clarity on technical aspects of the application of the arm's length principle, and to better align the Canadian transfer pricing rules with international standards and transfer pricing guidance published by the Organization for Economic Co-operation and Development (OECD Guidelines). Finance is accepting comments on these proposed changes until July 28, 2023. Although it is not yet clear when these proposed measures could be enacted, Finance notes that they are expected to apply on a prospective basis.
As a result of these proposed changes, affected taxpayers should review the consultation document, assess the potential future impact of the proposed changes on their transfer pricing policies, and consider whether the taxpayer should submit comments on the proposed changes.
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