Page 57 - Strategic Tax Planning for Global Commerce & Investment

Strategic Tax Planning for Global Commerce and Investment

 Managerial, legal, accounting and fi-
nance, credit and collection.

Contractual Terms

Another important factor of comparable analysis requires that
the significant contractual terms be compared between the
controlled and uncontrolled transactions that could affect the
results of the two transactions. The contractual terms that are
important and could have an effect in transfer pricing are the
following:

 The form of consideration charged to the en-
tity or paid by the entity
 The specific volume of sales or the specific
volume of purchases

 The scope and terms of warranties agreed
by the parties
 Rights to updates, revisions or modifications
 The duration, termination and renegotiation
rights for relevant license, contract or other
agreements
 Payment terms and extension of credit

Adjustments should be made to the transfer price if the
difference between the transactions would have a material effect
on price. Agreements that are in writing and made in advance of
the transaction should be respected if the terms are consistent
with the economic substance of the underlying transactions.

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