FAR Check List

transfer pricing world

1. General Client’s answer
1.1 Briefly explain the operational / functional organization structure of the company i.e. Various divisions ( manufacturing, engineering etc.)
1.2 Details regarding shareholding pattern and the ownership structure to ascertain the Associate Enterprise ( ‘ AE ‘) relationship.
1.3 Copy of Group Transfer Pricing Policy, if any.
1.3 Copy of Group Transfer Pricing Policy, if any.
2. Industry
2.1 Key competitors
2.2 Factors influencing pricing
2.3 A record of the economic and market study, forecasts, budgets or any other financial estimates prepared by the assessee for the business as a whole or for each division or product separately, which may have a bearing on the international transactions entered into by the assessee.
3. Financials
3.1 Budget process, including basis of business-wise allocation.
3.2 Annual report for the year ended March ( for the last three years ).
3.3 Whether any tax holiday / exemption is availed?
3.4 Past Tax Position. Whether the company faced any enquiry from the Revenue Authorities on transfer pricing for the financial year ended March. If yes, provide a brief note of the outcome of the above and current status on the same. If possible, provide copy of the relevant orders.
4. Specific Transaction
4.1 Nature of products sold
4.2 Mode of determining the sale price
4.3 Is the sale price net of export incentives, if any?
4.4 Explain the process involved and functions performed by the entity of a country and the overseas affiliate in export of finished goods.
4.5 What are the basic terms and conditions of the contract and the risks assumed by the entity of a country and the overseas affiliate ? Provide a copy of the agreement / contract and the supporting correspondence viz., Invoices, Custom Valuation Report, quotations from third parties ( if any ) etc.
4.6 Whether the entity of a particular country ( i.e. Tested party) has sold same / similar products to any of the third parties in / outside that particular country. If yes, price charged and terms and conditions for sale of such products. Also provide copy of agreement, if any.
4.7 Whether the overseas affiliate has purchased same / similar products from any third party in / outside of a particular country (tested party) ? If yes, price charged and terms and conditions for sale of such products. Also provide copy of agreements, if any.
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