Rethinking Profit Attribution: Exploring Models Derived from the Arm’s Length Principle and Beyond

While debates continue under Workstream II of the UN Framework Convention on International Tax Cooperation and the UN Committee of Tax Experts, developing countries, face both capacity and conceptual gaps in identifying feasible and preferably harmonized alternatives to the ALP. This article is a working paper that aims to fill the knowledge gap by providing a structured overview and comparative assessment of profit attribution models. It reviews existing and emerging approaches, assessing their theoretical underpinnings, practical feasibility and implications for administrative capacity, equity and simplicity. The article provides high-level evaluations listing possible advantages or shortcomings of the respective models but expressly does not advocate any particular model.