TPG2017 Chapter IV Annex II paragraph 44

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44. To increase the reliability of the MAP APA methodology, taxpayers and tax administrations should attempt to identify critical assumptions that are, where possible, based on observable, reliable and independent data. Such assumptions are not limited to items within the control of the taxpayer. Any set of critical assumptions needs to be tailored to the individual circumstances of the taxpayer, the particular commercial environment, the methodology, and the type of transactions covered. They should not be drawn so tightly that certainty provided by the agreement is jeopardised, but should encompass as wide a range of variation in the underlying facts as the parties to the agreement feel comfortable with. In general, however, and by way of example only, critical assumptions might include:
a) Assumptions about the relevant domestic tax law and treaty provisions.
b) Assumptions about tariffs, duties, import restrictions and government regulations.
c) Assumptions about economic conditions, market share, market conditions, end-selling price, and sales volume.
d) Assumptions about the nature of the functions and risks of the enterprises involved in the transactions.
e) Assumptions about exchange rates, interest rates, credit rating and capital structure.
f) Assumptions about management or financial accounting and classification of income and expenses; and
g) Assumptions about the enterprises that will operate in each jurisdiction and the form in which they will do so.






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