Related entities must comply with the arm's length standard when determining net income. The net income is considered to meet this standard when the financial or commercial transactions, on which it is based, were carried out under conditions that are similar to those that would apply between unrelated entities in comparable circumstances.

If this is not complied with, the Tax Department shall have the right to determine the net income based on the arm's length price.

The executive regulations will define controls related to identifying related entities, and the methods and rules for calculating the arm's length price.