
Abuses in Related Party Transactions | 39
manipulations in the invoicing of sale and pur-
chase of goods/services, inter-corporate deposits
and interest payments are other ways by which
taxes are avoided in high tax countries. It has been
widely reported in the media that many UK com-
panies have established units in Luxemburg which
lend money back to UK units as a tax avoidance
measure. In Luxemburg, prot tax is less than
1% whereas in the UK, the corporate prot tax is
around 24%.
Arm’s Length Principle
Whether in the area of corporate regulation or
in the area of taxation, the governing principle in
transactions between related parties is ...