In June 2023, the Canadian Department of Finance asserted that the existing form of Section 247 Canadian Income Tax Act resulted in an undue focus on intra-group contracts rather than the genuine substance of transactions. According to the Canadian Department of Finance’s, this emphasis has yielded situations where the allocation of profits between Canadian and non-resident taxpayers does not align with the true economic contributions of the involved parties. Therefore, a modernization of the transfer pricing rules is necessary.
