Comparable Uncontrolled Price Method

Below this strategy, transfer rates are set by reference to rates made use of in comparable transactions amongst independent providers or amongst the corporation and an unrelated third celebration. It is actually suitable when goods are sufficiently prevalent that controlled sales are basically comparable to sales on the open market place. Commodity-type solutions ordinarily use this process for internal transactions.

Comparable Uncontrolled Transaction Method

This process applies to transfers of intangible assets. It identifies a benchmark royalty rate by referencing uncontrolled transactions in which precisely the same or related intangibles are transferred. Like the comparable uncontrolled price method, this process relies on market place comparables.

Resale Price Method

This process calculates an arm’s-length price tag by beginning together with the final selling price tag at which the item in query is sold to an uncontrolled third celebration. An suitable margin to cover expenditures and also a usual profit is then deducted from this price tag to derive the intracompany transfer price tag. This process is commonly made use of when the unit obtaining the item is usually a distributor or sales subsidiary. To illustrate this pricing process, assume that a provider wishes to price tag a item sold by one particular of its operating units to one particular of its foreign distribution units.