Transfer Pricing concept Comparable Uncontrolled Pricing international tax law cs notes



Posted on 26-03-2016        By ADMIN



Introduction To Transfer Pricing concept  Comparable Uncontrolled Pricing international taxlaw cs notes

Comparable Uncontrolled Pricing
This is the most direct way of determining arms length price. Uncontrolledprice is the price agreed between unrelated parties for the transfer of goodsand services. It is of two types:

i) Internal CUP
The taxpayer enters into transactions with unrelated parties, and similartransaction is entered with related parties as well. Therefore in this casesimilar product is sold to a third party and the same is also transferred to anassociated enterprise.

ii) External CUP
A transaction takes place between two independent enterprises under comparableconditions and comparable goods and services.

CUP is the most reliable method in case of internal CUP, but in this case alsoits has to be made sure that the following are thoroughly checked:
a) Type, quality and quantity of good sold and the good transferred to theassociated enterprise.
b) Geographic market
c) Foreign currency risks
d) Intangible property



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