. Use of money. Comparable interest rates may be readily available. Some systems provide safe haven rates based on published indices.
. Use of tangible property. Independent comparables may or may not exist, but reliable data may not be available.of pricesauthorities generally examine prices actually charged between related parties to determine whether adjustments are appropriate. Such examination is by comparison (testing) of such prices to comparable prices charged among unrelated parties. Such testing may occur only on examination of tax returns by the tax authority, or taxpayers may be required to conduct such testing themselves in advance or filing tax returns. Such testing requires a determination of how the testing must be conducted, referred to as a transfer pricing method. method rulesystems give preference to a specific method of testing prices. OECD and US systems, however, provide that the method used to test the appropriateness of related party prices should be that method that produces the most reliable measure of arm «s length results. This is often known as a «best method» rule. Under this approach, the system may require that more than one testing method be considered. Factors to be considered include comparability of tested and independent items, reliability of available data and assumptions under the method, and validation of the results of the method by other methods.uncontrolled price (CUP) systems consider a third party price for identical goods, services , or property under identical conditions, called a comparable uncontrolled price (CUP), to be the most reliable indicator of an arm »s length price. All systems permit testing using this method, but it is not always applicable. Further, it may be possible to reliably adjust CUPs where the goods, services, or property are identical but the sales terms or other limited items are different. As an example, an interest adjustment could be applied where the only difference in sales transactions is time for payment (eg, 30 days vs. 60 days). CUPs are based on actual transactions. For commodities, actual transactions of other parties may be reported in a reliable manner. For other items, «in-house» comparables, ie, transactions of one of the controlled parties with third parties, may be the only available reliable data.transactional methodsother methods relying on actual transactions (generally between one tested party and third parties) and not indices, aggregates, or market surveys are :
. Cost-plus (C +) method: goods or services provided to unrelated parties are consistently priced at actual cost plus a fixed markup. Testing is by comparison of the markup percentages.
. Resale price method (RPM): goods are regularly offered by a seller or purchased by a retailer to / from unrelated parties at a standard «list» price less a fixed discount. Testing is by comparison of the discount percentages. [14]
. Gross margin method: similar to resale price method, recognised in a few systems.methodsmethods of testing prices do not rely on actual transactions. Use of these methods may be necessary due to the lack of reliable data for transactional methods. In some cases, non-transactional methods may be more reliable than transactional methods because market and economic adjustments to transactions may not be reliable. These methods may include:
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