Taxation (International and Other Provisions) Act 2010 section 259KF

Provision for cases within Part 4

Section 259KF explains how the imported mismatch rules interact with the transfer pricing rules in Part 4 of the Act, so that where a deduction has already been reduced under transfer pricing, the hybrid mismatch calculation is adjusted accordingly.

• Where transfer pricing rules already require a reduction in the deduction for an imported mismatch payment, this section adjusts the hybrid mismatch calculation to avoid a double hit on the taxpayer.
• When calculating the relevant mismatch for the purpose of denying deductions under section 259KC(2), the mismatch payment is treated as reduced by the same proportion as the transfer pricing adjustment.
• When calculating the relevant mismatch for the purpose of section 259KC(3), the mismatch is recalculated as if the arm's length provision had been made instead of the actual provision, with the taxpayer's share adjusted accordingly.
• The terms "arm's length provision" and "actual provision" take their meaning from section 147(1), which is the core transfer pricing provision.

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