“FAR” to “FAIR”: Countering Environmental Damage by Making Transfer Pricing Fairer and More Equitable

Externalities like environmental pollution are comparability factors that remain invisible under existing transfer pricing rules. A separate evaluation of these externalities will enable a more accurate determination of the arm’s length price and may lead to redistribution of intra-group profits to polluting constituent entities, thereby augmenting revenue of jurisdictions that bear the environmental cost.