OECD Specific Tax Rules
OECD guidelines are voluntary for member nations. Some nations have adopted the guidelines almost unchanged. Terminology may vary between adopting nations, and may vary from that used above.
OECD guidelines give priority to transactional methods, described as the “most direct way” to establish comparability. The Transactional Net Margin Method and Profit Split methods are used either as methods of last resort or where traditional transactional methods cannot be reliably applied. CUP is not given priority among transactional methods in OECD guidelines. The Guidelines state, "It may be difficult to find a transaction between independent enterprises that is similar enough to a controlled transaction such that no differences have a material effect on price." Thus, adjustments are often required to either tested prices or uncontrolled process.
Read more about this topic: Transfer Pricing
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