Arm’s length principle—is it out of reach?
The arm’s length principle (ALP) has long been the cornerstone of international tax, governing how multinational corporations (MNCs) allocate profits and tax obligations across borders. However, this principle, based on the idea of treating each entity as separate, increasingly fails to capture the interconnected nature of modern MNCs. With complex value chains, intangible assets, and centralised decision-making, the traditional ALP approach is showing its limitations, prompting the question: is arm’s length now out of reach?
