B4.125 Indirect participation—transfer pricing and financing arrangements
As described in B4.124, the transfer pricing rules can only apply if at the time of the making or imposition of the actual provision between the two affected persons:
• one of the affected persons was directly or indirectly participating in the management, control or capital of the other, or
• the same person was directly or indirectly participating in the management, control or capital of each of the affected persons
For 'financing arrangements' there are further specific definitions of indirect participation. The definition of the term 'financing arrangements' is deliberately widely worded to mean arrangements made for providing or guaranteeing, or otherwise in connection with any debt, capital or other form of finance1. Most commonly, this will mean loans, but it will also cover equity, guarantees, and other financial instruments.
The rules do not apply to transactions that are not financing arrangements (eg sale of goods, supply of services, royalties are not normally caught, unless they relate to any extent to financing arrangements). Also they only apply where the person for whom the financing arrangements are made (usually, the borrower) is a body corporate or firm, which is consistent with the rest of the
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