Under the guidance in this section, the transaction should not be recognised. S1 is treated as not purchasing insurance and its profits are not reduced by the payment to S2; S2 is treated as not issuing insurance and therefore not being liable for any claim.
TPG2017 Chapter I paragraph 1.127
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By OECD
Category: OECD Transfer Pricing Guidelines (2017) | Tag: Delineation, Disregarding the transaction, Example, Example - commercially irrational transaction, Non-recognition and re-characterisation, Recognition of actual transaction, Substance over form
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