Any traditional or other transfer pricing method based on the OECD guidelines may be used, and the principle of best practice should be applied. If necessary, a combination of several methods is also possible.
Methods based on price comparison
- The CUP method – in transactions with tangible assets, intangible assets and financial transaction
- The resale price method – mainly used for distributors
- The cost-plus method – most often used for manufacturers selling to related parties and for the provision of services
Methods based on profit comparison
- The profit split method – highly integrated transactions, where the parties contribute uniquely to the transaction or when they own valuable intangible assets
- The transactional net margin method (TNMM) – The TNMM examines the net profit margin relative to an appropriate base (eg, costs, sales, and assets) that a taxpayer realizes from a controlled transaction (or transactions that it is appropriate to aggregate). It therefore operates in a similar manner to the cost plus and resale price methods, but is applied at a net margin level rather than a gross margin level.