TPguidelines

There will be many cases where no useful evidence of uncontrolled transactions will be available because, for example, the goods or services etc. which are supplied are so special to the group that there is no open market in them and they are not supplied to independent enterprises. This may be particularly the case for example for semi-finished products or in relation to transfers of technology. In other cases the transactions within the group may not be satisfactorily comparable with those between the group and independent third parties, for example because they take place at a different stage in the chain of production or distribution or because the independent third party is too small a customer to claim the discounts for volume which an entity within the group might be big enough to achieve if it were independent. In such circumstances it will often be necessary, in order to establish an arm’s length price, to use either the cost plus method or the resale method, the cost plus method starting from the cost of, providing the goods or services etc. and adding whatever cost and profit mark-up is appropriate and the resale price method starting from the final selling price and subtracting the cost and an appropriate profit mark-up.