The arm’s length principle has also been found to work effectively in the vast majority of cases. For example, there are many cases involving the purchase and sale of commodities and the lending of money where an arm’s length price may readily be found in a comparable transaction undertaken by comparable independent enterprises under comparable circumstances. There are also many cases where a relevant comparison of transactions can be made at the level of financial indicators such as mark-up on costs, gross margin, or net profit indicators. Nevertheless, there are some significant cases in which the arm’s length principle is difficult and complicated to apply, for example, in MNE groups dealing in the integrated production of highly specialised goods, in unique intangibles, and/or in the provision of specialised services. Solutions exist to deal with such difficult cases, including the use of the transactional profit split method described in Chapter II, Part III of these Guidelines in those situations where it is the most appropriate method in the circumstances of the case.
TPG2017 Chapter I paragraph 1.9
Category: B. Statement of the arm's length principle, OECD Transfer Pricing Guidelines (2017), TPG2017 Chapter I: The Arm's Length Principle | Tag: Article 9, Most appropriate transfer pricing method, Net Profit Indicator/Profit Level Indicator (PLI), Profit split method« Prev | Next »
TPG2018 Chapter II paragraph 2.116
As is noted in paragraph 2.2, the selection of a transfer pricing method always aims at finding the most appropriate method for a particular case, taking...TPG2018 Chapter II paragraph 2.129
It may also be relevant to consider industry practices. For instance, if information is available that independent parties do commonly use profit splitting approaches in similar...TPG2018 Chapter II paragraph 2.137
Where a party contributes to the control of economically significant risk, but that risk is assumed by the other party to the transaction, this may, in...TPG2018 Chapter II paragraph 2.139
A transactional profit split may be found to be the most appropriate method where, according to the accurately delineated transaction, each party to the controlled transaction...TPG2018 Chapter II paragraph 2.145
This section has described certain characteristics of the transactional profit split method and provided a number of potential indicators as to when it may be found...
TP case laws
Norway vs “Distributor A AS”, March 2021, Tax Board, Case No 01-NS 131/2017