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GC 6: Purpose and application of rules and nature of arrangements
or “Rules for taxing international business deals fairly”
You could also call this:

“You pay tax on the fair price, not the higher price you paid”

If you pay more than what’s considered a fair price in a transfer pricing arrangement, the law treats the fair price as the amount you actually paid. This affects how much income tax you need to pay for the year. The fair price is called an “arm’s length amount”. This rule helps make sure you don’t pay too much tax if you’ve been charged too much in a business deal.

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Next up: GC 8: Insufficient amount receivable by person

or “Rules for fair payment in business deals and their tax implications”
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Part G Avoidance and non-market transactions
Market value substituted

GC 7Excess amount payable by person

  1. If the amount of consideration payable by a person (the taxpayer) under a transfer pricing arrangement is more than an arm’s length amount, an amount equal to the arm’s length amount is treated as the amount payable by the taxpayer for the purposes of the calculation of their income tax liability for a tax year.

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