Canada’s tax authority has released updated guidance on how transfer pricing rules apply to transactions within multinational groups. The document explains when the rules apply, what records and documentation taxpayers must keep for non-arm’s-length transactions with nonresidents, and the reporting obligations, including information returns and country-by-country reporting. It also notes that taxpayers may face a penalty of 10% of certain transfer pricing adjustments if they can’t show they made reasonable efforts to apply arm’s-length pricing. The guidance outlines the accepted methods for testing compliance, including the use of advance pricing arrangements (APAs).
The Guidance can be accessed here.