Can the Arm’s Length Principle in the OECD Transfer Pricing Guidelines Fulfil the Minimum Requirements of the Transaction Approach in the Controlled Foreign Company Rules under Anti-Tax Avoidance Directive?

Sammanfattning: Generally, the ALP in TP regulations is widely applied in order to prevent price manipulation which will cause tax avoidance. And CFC regulations have usually been regarded as a “backstop” of TP regulations in terms of combating tax avoidance. While CFC regulations aim at achieving this goal in a divergent way of re-attributing the undistributed income back to the parent state. Thus, although CFC regulations are applicable in a narrower scope , it cannot be concluded categorically that CFC regulations are needless provided TP regulations are in use. Hence, the effort of this thesis paper will be devoted to the analysis of the interrelation between the ALP in TP regulations and model B of CFC regulations under ATAD, the fundamental discrepancies substantially rooted in them, and the consequences these disparities will make accordingly when these two regimes are separately applied to deter the profit shifting. The emphasis will also be placed on the tests of the concurrent application of both regimes under different scenarios. The focal point will end in answering the primary question: whether CFC regulations are truly a “backstop” of TP regulations and whether the TP regulations are capable of altering the CFC regulations under ATAD transaction approach as they may lead to the same result?