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Revised Guidance on Arm's Length Range \& Statistical Applications
CRA memoranda confirm the use of arm's length ranges, interquartile ranges, and statistical means—aligned with the OECD standard. Loss-making comparables and outliers are generally excluded unless reliably justified.
Pillar 2 (Global Minimum Tax) Adoption \& Legislation
Canada has introduced draft legislation to enact the OECD's BEPS Pillar 2 global minimum tax, setting a 15% minimum for large multinational groups starting in fiscal years after December 31, 2024. The legislation includes extensive disclosure and compliance obligations.
Country-by-Country Reporting
Canadian multinationals with consolidated revenue of €750 million or more must file a CbC report (Form RC4649) within 12 months of their year-end. The CRA is monitoring public CbC reporting developments under the EU for potential Canadian impacts.
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OECD-Style Advanced Pricing Arrangements (APAs)
Canada maintains a sophisticated APA program for unilateral, bilateral, and multilateral deals per Information Circular IC94-4R. CRA is focused on reducing application backlog and aligns the program with OECD BEPS standards, particularly for high-value intangibles.
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New Focus on Intangibles and DEMPE Functions
Canada is implementing OECD guidance on documenting the location and justification of Development, Enhancement, Maintenance, Protection, and Exploitation (DEMPE) functions to test intercompany intangible transactions.
Enhanced Enforcement: High-Risk Transactions
CRA uses data analytics and risk profiling to target cross-border debt, intellectual property, hard-to-value intangibles, and business restructurings. Aggressive enforcement and audit strategies are outlined in annual CRA compliance plans.
Three-Year Block Assessment for Transfer Pricing
India's 2025 Finance Bill introduces an optional three-year block assessment scheme. If the Transfer Pricing Officer establishes an Arm's Length Price (ALP) for one year, the same method may apply for the next two years, aiming to reduce administrative burden and disputes.
Broader Safe Harbour: Digital & Auto Sector
The latest safe harbour notification explicitly covers lithium-ion batteries and broadens sectoral coverage for AYs 2025-26 and 2026-27, enhancing certainty for EV, IT, and pharma value chains.
Expanded Safe Harbour Rules and Higher Turnover Thresholds
CBDT notifies amendments for Assessment Years 2025-26 and 2026-27, raising the turnover threshold (from ₹2b to ₹3b for certain transactions) and expanding safe harbour coverage to sectors like lithium-ion batteries for e-vehicles, IT/ITeS, KPO, pharma R\&D, and auto components.
New Income Tax Bill 2025: AE Definition and ALP Calculation
The new law clarifies the definition of Associated Enterprises and addresses calculation methods for the arm's length price, with the potential to introduce the use of interquartile range or other prescribed methods instead of the mean.
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