Corporation Tax Act 2009 section 22

Transactions treated as being on arm's length terms

Section 22 establishes that transactions between a permanent establishment and the rest of its non-UK resident parent company must be treated as if they were conducted on arm's length terms.

• Applies the separate enterprise principle to internal transactions within a non-UK resident company
• Requires that dealings between a permanent establishment and other parts of the same company are priced as if between independent parties
• Ensures that profits attributed to the permanent establishment reflect what would arise in a genuine third-party transaction
• Prevents artificial shifting of profits away from the UK permanent establishment through non-commercial internal pricing