Page 58 - Strategic Tax Planning for Global Commerce & Investment

Tax Benefits for U.S. Exporters

Economic Conditions

Comparability analysis also requires the evaluation of important
economic conditions that could affect the price and benefits of
the transaction and, the level of comparability between the
controlled transactions and the uncontrolled transactions. These
factors include:

 The similarity of the geographic markets

 The relative size of each market and the ex-
tent of overall economic development in
each market
 Is it a wholesale or retail market
 Market shares for products, properties or

services transferred or provided
 Specific cost at the given location of the fac-
tors of production and distribution
 Extent of competition in each market
 Economic conditions of the particular indus-
try

Business Strategies

Business strategies must also be examined in determining
comparability for transfer pricing purposes. Business strategies
would take into account many aspects of an enterprise such as:
innovation, new product development, degree of diversification,
degree of risk, assessment of political changes and duration of
the arrangements.

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