Article 22 - Arm’s Length Principle Requirements

Adjustments shall be made to the amounts recorded in the financial statements of a CE if the results of transactions with another CE, whether situated in the same jurisdiction or in a different jurisdiction and part of the same MNE Group (including MOCEs), are not recorded at the same value by both parties or do not comply with the Arm’s Length Principle.

In the case that a loss is recorded in the GloBE Income or Loss due to the sale or transfer of an asset between two CEs within the State, the loss must be recalculated according to the Arm’s Length Principle if it was not recorded consistently with this principle.

Transactions between Investment Entities and other CEs within the same MNE Group located in the State must also be recorded in accordance with the Arm’s Length Principle.

Income or loss must be allocated between the Main Entity and its PEs as per Article 31 of these ERs.

To implement the Arm’s Length Principle, the transfer pricing methods outlined in Chapter Ten of these ERs must be followed.