The Arm's Length Principle and the Fixed Length Principle Economic Analysis

Abstract

This paper analyzes the length principles which followed by the authorities and scrutinizes which plausible improvements could happen to them. Thence, this thesis is about the arm’s length principle and the fixed length principle. The arm’s length principle is one of the basic principles which used from the companies of controlled transactions for transfer pricing purposes. Consequently, the fixed length principle enhances the control of global tax revenues. A mathematical view of this approach is determined in this paper.

Keywords: arm’s length principle, fixed length principle, controlled transactions, tax, and public policies

JEL Classification: F6, F40, F43, F62, F63