Examples of comparability adjustments include adjustments for accounting consistency designed to eliminate differences that may arise from differing accounting practices between the controlled and uncontrolled transactions; segmentation of financial data to eliminate significant non- comparable transactions; adjustments for differences in capital, functions, assets, risks.
TPG2017 Chapter III paragraph 3.48
Category: A. Performing a comparability analysis, OECD Transfer Pricing Guidelines (2017), TPG2017 Chapter III: Comparability Analysis | Tag: Adjustments for accounting consistency, Adjustments for differences in functions assets risks, Comparability adjustments, Comparability analysis, Segmentation of financial data
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- TPG2022 Chapter III paragraph 3.48Examples of comparability adjustments include adjustments for accounting consistency designed to eliminate differences that may arise from differing accounting practices between the controlled and uncontrolled transactions; segmentation of financial data to eliminate significant non- comparable transactions; adjustments for differences in capital, functions, assets,...
- OECD COVID-19 TPG paragraph 9The unprecedented change in the economic environment following the outbreak of COVID-19 creates unique challenges for performing comparability analysis. The pandemic may have a significant impact on the pricing of some transactions between independent enterprises and may reduce the reliance that can be...
- OECD COVID-19 TPG paragraph 28This aspect is also relevant in performing the comparability analysis. For instance, assume government intervention forces a taxpayer to close its distribution facilities for three months. In undertaking a benchmark analysis, care should be taken in verifying that comparable enterprises have faced similar...
- OECD COVID-19 TPG paragraph 54Third, adjustments for accounting consistency may be required to improve comparability. Adjustments for accounting consistency are designed to eliminate the effect of differing accounting practices between the controlled and uncontrolled transactions and should be considered if and only if they are expected to...
- TPG2022 Chapter III paragraph 3.54Ensuring the needed level of transparency of comparability adjustments may depend upon the availability of an explanation of any adjustments performed, the reasons for the adjustments being considered appropriate, how they were calculated, how they changed the results for each comparable and how...
- TPG2022 Chapter III paragraph 3.53It is not appropriate to view some comparability adjustments, such as for differences in levels of working capital, as “routine†and uncontroversial, and to view certain other adjustments, such as for country risk, as more subjective and therefore subject to additional requirements of...
Related Case Law
- Romania vs “Electrolux” A. SA, November 2020, Supreme Court, Case No 6059/2020In this case, a Romanian manufacturer and distributor (A. SA) in the Electrolux group (C) had been loss making while the group as a whole had been profitable. The tax authorities issued an assessment, where the profit of A. SA had been determined...