Transfer pricing continues to be an area in which the Canada Revenue Agency is devoting significant resources in order to ensure that multinational enterprises operating in Canada are subject to Canadian taxes at the appropriate level and that profits are not diverted away from Canada into other, often low tax, jurisdictions.  The recent decision of GlaxoSmithKline Inc. v. The Queen is very significant because it is the first Tax Court decision to consider the application of the Organisation for Co-Operation and Economic Development’s (the "OECD") transfer pricing guidelines in the Canadian context, and given that the Court decided against the taxpayer, it will likely encourage the CRA to continue to focus on reassessing taxpayers from a transfer pricing perspective.

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