Arm's length principle
Transfer pricing and the arm's length principle were one of the focal points of the base erosion and profit shifting (BEPS) model developed by the OECD and endorsed by the G20.The parents might wish to sell the property to their children at a price below market value, but such a transaction might later be classified by a court as a gift rather than a bona fide sale, which could have tax and other legal consequences.[3] In the workplace, supervisors and managers deal with employee discipline and termination of employment at arm's length through the human resources department, if the company has one.This is intended to protect the employer from legal recourse that employees may otherwise have if it can be demonstrated that such discipline or terminations were not handled in accordance with the latest labor laws.Transfer pricing became a highly controversial topic in the 2010s,[5] which contributed to the development of the Base Erosion and Profit Shifting (BEPS) project by the OECD and with the endorsement of the G20.