In this article, the authors affirm that while some economic studies conclude that there is a breach of the arm’s length standard by corporations, the reality is not clear. It is uncertain how tax authorities in different countries apply the arm’s length standard and whether it is applied in a consistent manner throughout various countries. The real problem is whether the arm’s length standard, as laid down in the OECD Guidelines (and in countries’ legislation), allows firms and tax authorities to anticipate which is the right rule to apply in concrete cases. This article presents some reasons and circumstances why and when this does and does not occur, and proposes some solutions.