Documenting intragroup transactions on machinery and equipment

Transfer Pricing (TP) guidelines generally require associated entities to invoice each other appropriately so as to correspond to the value of the goods transferred or services provided whenever an intra-group transaction takes place. The basis for determining proper compensation is, in most cases, the arm’s length principle. In a nutshell, the arm’s-length principle requires that … Read more

Transfer pricing in Management Fee

Transfer pricing methodology in Management Fee agreements could turn to be very problematic for related party transactions. The main reason is that the agreements are not usually based on specific financial terms, but the service provider is charging a gross amount on a monthly on annual basis, without provisioning the amount of work which is … Read more

Arm’s Length Principle

Introduction This Chapter provides a background discussion of the arm’s length principle, which is the international transfer pricing standard that OECD member countries have agreed should be used for tax purposes by MNE groups and tax administrations. The Chapter discusses the arm’s length principle, reaffirms its status as the international standard, and sets forth guidelines … Read more

Transfer Pricing Methods

The selection of a transfer pricing method always aims at finding the most appropriate method for a particular case. For this purpose, the selection process should take account of the respective strengths and weaknesses of the OECD recognised methods. “Traditional transaction methods” and “transactional profit methods” can be used to establish whether the conditions imposed … Read more