All terms

An agreement with one or more tax authorities fixing the transfer pricing method for specified transactions over a future period.

The rule that transactions between related companies should be priced as if the parties were independent.

A range of figures produced by applying a method to multiple comparable data points, any of which may be arm's length.

Two enterprises are associated when one participates in the management, control or capital of the other, or the same persons do so for both.

The cross-border reallocation of functions, assets or risks between associated enterprises, and the compensation, if any, due for it.

The process of finding uncontrolled transactions or companies similar enough to test whether a controlled outcome is arm's length.

A method that compares the price charged in a controlled transaction with the price in a comparable uncontrolled transaction.

A transaction between two associated enterprises, and therefore the unit that transfer pricing rules test.

An annual report by large multinational groups showing revenue, profit, tax, employees and assets for every tax jurisdiction in which they operate.

The framework allocating intangible returns to the entities that perform and control development, enhancement, maintenance, protection and exploitation functions.

Intangibles transferred between related parties for which no reliable comparables exist and projections at transfer are highly uncertain.

The pricing and characterisation of loans, guarantees, cash pooling and captive insurance between associated enterprises.

Country-specific documentation covering the local entity's material controlled transactions and the analysis supporting their pricing.

A group-level document giving tax authorities a high-level overview of the multinational's business, intangibles, financing and transfer pricing policies.

The requirement to choose the transfer pricing method best suited to the facts, rather than following a fixed hierarchy.

A treaty mechanism through which two tax authorities negotiate to resolve taxation not in accordance with the treaty, including double taxation from transfer pricing adjustments.

A fixed place of business, or dependent agent activity, through which an enterprise becomes taxable in another country.

A method that tests the net profit margin a party earns from a controlled transaction against margins earned by independent companies.

A method that divides the combined profit from a controlled transaction between the parties on an economically valid basis.

A change to taxable profit imposed by a tax authority, or made by a taxpayer, to reflect arm's length conditions.

A structured review identifying which controlled transactions are most likely to attract challenge and what the exposure would be.

An adjustment made by the taxpayer before or at year end to bring a controlled outcome into the arm's length range.