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HOW TO CHOOSE A TRANSFER PRICING METHOD
WHAT IS TRANSFER PRICING?
Transfer pricing refers to the pricing of transactions between associated enterprises, such as holding and subsidiary companies, under conditions differing from those between independent enterprises
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WHY IS TRANSFER PRICING IMPORTANT?
It
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WHAT IS THE ARM’S LENGTH PRICE (ALP)?
ALP is the price at which a transaction between associated enterprises would have occurred if it were between unrelated parties, ensuring fairness and accuracy in allocating profits
HOW IS THE ALP DETERMINED?
The ALP can be determined using various methods prescribed by tax authorities, including the Comparable Uncontrolled Price (CUP) method, Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), Transactional Net Margin Method (TNMM), and Other Methods
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WHAT IS THE COMPARABLE UNCONTROLLED PRICE (CUP) METHOD?
CUP compares the price of a controlled transaction with that of an uncontrolled transaction for similar goods or services It's preferred when reliable comparable data is available
