Arm's Length

Arm’s Length — «принцип правовой и коммерческой самостоятельности» — is the description of an agreement made by two parties freely and independently of each other and without some special relationship, such as being a relative, having another deal on the side, or one party having complete control of the other.

The arm’s length principle is the keystone of the transfer pricing regulation — that is when a parent company and a subsidiary or two subsidiaries controlled by a common parent trade with each other is such a way that profit is shifted into a favourable location. In Russia the arm’s length principle is established by articles 20, 40 and Chapter V.I. of the Tax Code.