PRACTICAL APPROACH REGARDING THE BENCHMARK STUDY IN THE CONTEXT OF A TRANSFER PRICING ANALYSIS

Abstract

Transfer pricing subject approached from the perspective of the transfer pricing analysis is relatively a new concept studied within the literature. The process of such an analysis involves the going through several stages, including the performance of a benchmark study (i.e. a study which provides information in relation to the prices/ profitability indicators obtained by independent entities performing similar transactions to that under analysis). The benchmark study is very important in the context of a transfer pricing analysis as based on its results there could be assessed if a related-party transaction complies or not with the arm`s length principle (i.e. if the prices charged within the related-party transaction are at market level). In this context, the objective of the paper is to illustrate based on a case study how should be performed a benchmark study for a related-party transaction which involves the provisions of IT services. In this respect there was used the online version of the Orbis database and the search criteria applied were correlated with the applicable provisions of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (version published in 2017). The main conclusion of the paper is that transfer prices are not an exact science and the benchmark study presented within this paper should not be understood as a universal recipe, but rather as an example based on which the readers could familiarize with the mechanism involved by a benchmark study

Keywords

• benchmark study
• comparability analysis
• transfer pricing
• oecd transfer pricing guidelines