Most Appropriate Method
The Most Appropriate Method ensures accurate transfer pricing by analyzing transactions based on functions, assets, risks, and comparable data reliability.
- Arm's Length Price
- Advance Pricie Agreement (APA)
- Cost Plus Method (CPM)
- Comparable (CUP) Method
- Profit Split Method (PSM)
- Resale Price Method (RPM)
- Transactional Net Margin(TNMM)
- Double Taxation (DTAA)
- FAR (Functions, Assets and Risks)
- TP Methods / Analysis
- Mutual Agreement Procedure (MAP)
- Transfer Pricing Documentation
- Thin Capitalization
- Online Grievances
- TP Judicial Decisions
- TP Rules / Regulations
- OECD Guidelines
Most appropriate method
A “most appropriate method ” chosen based on all applicable facts and situation and the existing comparability information.
Most Appropriate Methods:
Cost plus method (CPM): this method is generally used where semi finished products are transferred.
Comparable Uncontrolled Prices Method (CUP): ): this not favorable as no public database is accessible concerning prices apply by autonomous enterprises in import of comparable products.
Resale Price Method (RPM):): In this method the vendor adds comparatively small or no value to goods taken from associate enterprises. In the current case in this method may be taken as the very important method as similar data of comparable deals by independent entities is available.
Profit Split Method (PSM): PSM method is used when associate enterprises are so combined that it turns into difficult to make transfer pricing analysis on transactional methods basis.
Transactional Net Margin Method (TNMM): In this method generally apply in the case of transfer of partially completed products, distribution of completed goods and where RPM cannot be sufficiently applied. In general RPM more suitably applied in this case, TNMM is also not right.