arm's length

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arm's length

adj. the description of an agreement made by two parties freely and independently of each other, and without some special relationship, such as being a relative, having another deal on the side or one party having complete control of the other. It becomes important to determine if an agreement was freely entered into to show that the price, requirements, and other conditions were fair and real. Example: if a man sells property to his son the value set may not be the true value since it may not have been an "arm's length" transaction. (See: contract)

References in periodicals archive ?
Rather, the taxpayer should be permitted to establish through the regularly applicable documentation rules that its transactions satisfy the arm's length principle.
An expansion of the use of the transactional profit split through an assertion by the tax authorities of "valuable intangibles" where there are none or through the assertion of the "highly integrated" nature of the MNE's operations in inappropriate circumstances would lead to an increase in documentation requirements as well as a misapplication of the arm's length principle.
In order to satisfy the arm's length principle, all that should be required at the individual entity level is confirmation that (1) the rights and assets are transferred at their respective fair market value (i.
The Discussion Draft conflates these two very different situations without carefully delineating between them and addressing how the arm's length principle may apply in each case.
The arm's length principle is found in Article 9 of the OECD Model Tax Convention.
In international tax law, the arm's length principle states that multinational enterprises should carry out controlled transactions at arm's length prices, or prices which associated enterprises would have agreed to if they had made a comparable transaction on the open market rather than the controlled transaction that was in fact made in order that taxation may be levied in relation to the hypothetical "normal" transaction.
The authoritative statement of the arm's length principle, expressed in the worst sort of legalese, is found in paragraph 1 of Article 9 of the OECD Model Tax Convention, which provides:
Under such circumstances the arm's length principle is preferred (Sekulic Grgic, 2005), according to which efforts are being made to determine a price agreed between independent subjects within a same or comparable transaction.
Loans can only be given at an arm's length principle.
The point of the arm's length principle is to ensure that politicians - most of whom do not have artistic sensibilities - are not allowed a say in which artists should receive public funding, and how much.
The courts counter that the politicians should operate an arm's length principle.