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 ?
However, because the arm's length principle cannot always be applied with full precision, it leaves some room for reasonable interpretation; and companies will use that room to structure their transactions and transfer prices to enhance the bottom-line and shareholder value while still complying with tax rules.
But this arm's length principle misses the point by ignoring the economic reality of the MNE.
Practice shows that commonly used transfer pricing methods may not be the best practice and that the inherent difficulties of applying the arm's length principle can result with sub-optimal transfer pricing systems.
The Arts Review's conclusions represent a humiliation for Alun Pugh because the arm's length principle is being maintained and direct funding will not happen.
Similar to the section 482 regulations, the Organization for Economic Cooperation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrators ("OECD guidelines") endorse the arm's length principle as the international standard for the evaluation of intra-group pricing.
The Indian Tax Administration has introduced Rule 10AB which allows tax payers more flexibility to calculate Arm's Length Principle for routine as well as non-routine transactions such as reimbursements and collective transfers of tangible and intangible properties.
A profit split method is usually to be avoided due to its complexity and its relative departure from the arm's length principle when compared to more commonly used methods.
TEI agrees with the OECD recommendation that, when applying the arm's length principle, the process of identifying the commercial or financial relationship between associated enterprises follows from examining the contractual terms governing such relationship together with an analysis of the actual conduct of the parties.
China's transfer pricing rules require compliance with the arm's length principle for related party transactions between "associated enterprises," which are defined in a manner consistent with that of the OECD Transfer Pricing Guidelines.
Regrettably, the Draft is another manifestation of the OECD's move away from the arm's length principle in various respects during the course of its BEPS project.
Mr Thomas said, 'These documents show quite clearly the Government were conniving to undermine the position of the Arts Council Chair and the arm's length principle several months before the Chair was informed that his services were no longer required.