Renewed interest in comparability analysis in transfer pricing
September 22, 2008
Batanayi Katongera, senior transfer pricing manager at Thomson Reuters, discusses why there soon could be a heightened interest in comparability analysis in transfer pricing documentation.
A review of the draft work of the working party no. 6 (WP6) of the OECD Committee on Fiscal Affairs into the application of transactional profit methods, reveals that there may soon be an increased focus by OECD member country tax authorities in the comparability analysis (including functional analysis) in transfer pricing documentation. This will have particular relevance to the selection and application of the transactional net margin method (TNMM) for transfer pricing documentation. Published in 1995, the OECD transfer pricing guidelines for multinational enterprises and tax administrations (the guidelines) stipulate that traditional transaction methods are regarded as preferable to other methods.
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