Transfer Pricing Rules

Central to transfer pricing rules is the arm’s‑length principle. The OECD Guidelines provide the accepted framework to apply this principle consistently across jurisdictions. Key transfer pricing methods include:

• Comparable Uncontrolled Price (CUP): Matching with prices in comparable uncontrolled transactions

• Cost‑Plus: Adding an appropriate markup to costs incurred

• Transactional Net Margin (TNMM): Ensuring net margins align with those of comparables

These methods translate the abstract rules into practical tests for your intercompany pricing. Quantera Global helps to decide on the best transfer pricing strategy and offers a transfer pricing analysis that shows opportunities and threats.

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While OECD sets baseline rules, local jurisdictions adapt them with specific documentation thresholds, penalties, and safe harbors. Understanding these local variations is essential to applying global transfer pricing rules correctly.

Knowing these jurisdictional rules helps you avoid unexpected audits.

Quantera Global is formed by a diverse team of colleagues operating out of offices around the world including those of our alliance partners. This ensures that we are a one-stop-shop for multinationals in the field of transfer pricing.

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Robust documentation is a core requirement of transfer pricing rules and your best defense in an audit. To demonstrate compliance, companies must prepare:

• Master File: Overview of group‑wide policies, intangibles, and financing arrangements

• Local File: Detailed breakdown of local entity’s related‑party transactions

• Country-by-Country reporting: High‑level allocation of income, taxes paid, and indicators of economic activity across jurisdictions

Timely, accurate reports not only satisfy regulators but also support internal governance and investor confidence.

When standard rules leave uncertainty, rulings provide clarity and binding certainty. Advanced agreements with tax authorities can lock in your transfer pricing rules for future years:

• Advance Pricing Agreements (APAs): Unilateral, bilateral (BAPA), or multilateral (MAPA) agreements on pricing methods for 3–5 years

• Mutual Agreement Procedures (MAP): Post‑audit dispute resolution to prevent or eliminate double taxation

Securing an APA or MAP ensures your pricing approach aligns with the rules and avoids future challenges.

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Tax authorities enforce transfer pricing rules by identifying anomalies that suggest non‑arm’s‑length practices. Proactively addressing these risk areas ensures your rules-based pricing stands up to scrutiny.

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