Transfer Pricing Terms Deck

Question 1

Transfer Pricing The pricing of goods

Answer 1

services

Question 2

Arm’s Length Principle The standard that transfer prices should be the same as if the transactions were between unrelated parties.

Question 3

Comparable Uncontrolled Price (CUP) Method A transfer pricing method that compares the price charged in a controlled transaction to the price charged in a comparable uncontrolled transaction.

Question 4

Resale Price Method (RPM) A transfer pricing method that determines the transfer price based on the resale price to an independent party

Answer 4

minus a gross margin.

Question 5

Cost Plus Method (CPM) A transfer pricing method that adds an appropriate markup to the costs incurred by the supplier of goods or services.

Question 6

Transactional Net Margin Method (TNMM) A transfer pricing method that examines the net profit margin relative to an appropriate base

Answer 6

such as costs

Question 7

Profit Split Method (PSM) A transfer pricing method that divides the combined profits from controlled transactions among the associated enterprises based on their relative contributions.

Question 8

Advance Pricing Agreement (APA) An agreement between a taxpayer and tax authority on the appropriate transfer pricing methodology for future transactions.

Question 9

Transfer Pricing Documentation Records and reports that a company must maintain to demonstrate that its transfer prices comply with the arm’s length principle.

Question 10

Functional Analysis An analysis of the functions performed

Answer 10

risks assumed

Question 11

Benchmarking Study A study that identifies comparable uncontrolled transactions or companies to determine an arm’s length range of prices or margins.

Question 12

Interquartile Range (IQR) The range between the 25th and 75th percentiles of a set of data

Answer 12

often used in transfer pricing to determine an arm’s length range.

Question 13

Intangible Property Non-physical assets such as patents

Answer 13

trademarks

Question 14

Royalty A payment made for the use of intangible property

Answer 14

such as patents or trademarks.

Question 15

Cost Sharing Agreement (CSA) An agreement between related parties to share the costs and risks of developing

Answer 15

producing

Question 16

Transfer Pricing Adjustment An adjustment made by tax authorities to a company’s transfer prices to ensure they comply with the arm’s length principle.

Question 17

Transfer Pricing Risk The risk that a company’s transfer pricing practices will be challenged by tax authorities

Answer 17

leading to adjustments and penalties.

Question 18

Transfer Pricing Policy A company’s internal guidelines and procedures for setting and documenting transfer prices.

Question 19

Transfer Pricing Audit An examination by tax authorities of a company’s transfer pricing practices and documentation.

Question 20

Transfer Pricing Penalty A financial penalty imposed by tax authorities for non-compliance with transfer pricing regulations.

Question 21

Transfer Pricing Dispute A disagreement between a taxpayer and tax authority over the appropriate transfer pricing methodology or adjustments.

Question 22

Mutual Agreement Procedure (MAP) A process for resolving transfer pricing disputes between tax authorities of different countries.

Question 23

OECD Transfer Pricing Guidelines Guidelines issued by the Organisation for Economic Co-operation and Development (OECD) for applying the arm’s length principle.

Question 24

Base Erosion and Profit Shifting (BEPS) Strategies used by multinational companies to shift profits to low-tax jurisdictions

Answer 24

often addressed through transfer pricing regulations.

Question 25

Controlled Transaction A transaction between related parties

Answer 25

such as divisions within a multinational company.

Question 26

Uncontrolled Transaction A transaction between unrelated parties

Answer 26

used as a benchmark for determining arm's length prices.

Question 27

Comparable A transaction or company that is similar to the controlled transaction or company being analyzed for transfer pricing purposes.

Question 28

Market Price The price at which goods or services are sold between unrelated parties in the open market.

Question 29

Transfer Pricing Methodology The approach used to determine the arm's length price for a controlled transaction.

Question 30

Transfer Pricing Regulation Laws and rules governing the pricing of transactions between related parties.

Question 31

Transfer Pricing Compliance The process of ensuring that a company's transfer pricing practices adhere to applicable regulations and guidelines.

Question 32

Transfer Pricing Policy A company's internal guidelines and procedures for setting and documenting transfer prices.

Question 33

Transfer Pricing Adjustment An adjustment made by tax authorities to a company's transfer prices to ensure they comply with the arm's length principle.

Question 34

Transfer Pricing Risk The risk that a company's transfer pricing practices will be challenged by tax authorities

Answer 34

leading to adjustments and penalties.

Question 35

Transfer Pricing Penalty A financial penalty imposed by tax authorities for non-compliance with transfer pricing regulations.

Question 36

Transfer Pricing Dispute A disagreement between a taxpayer and tax authority over the appropriate transfer pricing methodology or adjustments.

Question 37

Mutual Agreement Procedure (MAP) A process for resolving transfer pricing disputes between tax authorities of different countries.

Question 38

OECD Transfer Pricing Guidelines Guidelines issued by the Organisation for Economic Co-operation and Development (OECD) for applying the arm's length principle.

Question 39

Base Erosion and Profit Shifting (BEPS) Strategies used by multinational companies to shift profits to low-tax jurisdictions

Answer 39

often addressed through transfer pricing regulations.

Question 40

Controlled Transaction A transaction between related parties

Answer 40

such as divisions within a multinational company.

Question 41

Uncontrolled Transaction A transaction between unrelated parties

Answer 41

used as a benchmark for determining arm's length prices.

Question 42

Comparable A transaction or company that is similar to the controlled transaction or company being analyzed for transfer pricing purposes.

Question 43

Market Price The price at which goods or services are sold between unrelated parties in the open market.

Question 44

Transfer Pricing Methodology The approach used to determine the arm's length price for a controlled transaction.

Question 45

Transfer Pricing Regulation Laws and rules governing the pricing of transactions between related parties.

Question 46

Transfer Pricing Compliance The process of ensuring that a company's transfer pricing practices adhere to applicable regulations and guidelines.

Question 47

Transfer Pricing Policy A company's internal guidelines and procedures for setting and documenting transfer prices.

Question 48

Transfer Pricing Adjustment An adjustment made by tax authorities to a company's transfer prices to ensure they comply with the arm's length principle.

Question 49

Transfer Pricing Risk The risk that a company's transfer pricing practices will be challenged by tax authorities

Answer 49

leading to adjustments and penalties.

Question 50

Transfer Pricing Penalty A financial penalty imposed by tax authorities for non-compliance with transfer pricing regulations.

Question 51

Transfer Pricing Dispute A disagreement between a taxpayer and tax authority over the appropriate transfer pricing methodology or adjustments.

Question 52

Mutual Agreement Procedure (MAP) A process for resolving transfer pricing disputes between tax authorities of different countries.

Question 53

OECD Transfer Pricing Guidelines Guidelines issued by the Organisation for Economic Co-operation and Development (OECD) for applying the arm's length principle.

Question 54

Base Erosion and Profit Shifting (BEPS) Strategies used by multinational companies to shift profits to low-tax jurisdictions

Answer 54

often addressed through transfer pricing regulations.

Question 55

Controlled Transaction A transaction between related parties

Answer 55

such as divisions within a multinational company.

Question 56

Uncontrolled Transaction A transaction between unrelated parties

Answer 56

used as a benchmark for determining arm's length prices.

Question 57

Comparable A transaction or company that is similar to the controlled transaction or company being analyzed for transfer pricing purposes.

Question 58

Market Price The price at which goods or services are sold between unrelated parties in the open market.

Question 59

Transfer Pricing Methodology The approach used to determine the arm's length price for a controlled transaction.

Question 60

Transfer Pricing Regulation Laws and rules governing the pricing of transactions between related parties.

Question 61

Transfer Pricing Compliance The process of ensuring that a company's transfer pricing practices adhere to applicable regulations and guidelines.

Question 62

Transfer Pricing Policy A company's internal guidelines and procedures for setting and documenting transfer prices.

Question 63

Transfer Pricing Adjustment An adjustment made by tax authorities to a company's transfer prices to ensure they comply with the arm's length principle.

Question 64

Transfer Pricing Risk The risk that a company's transfer pricing practices will be challenged by tax authorities

Answer 64

leading to adjustments and penalties.

Question 65

Transfer Pricing Penalty A financial penalty imposed by tax authorities for non-compliance with transfer pricing regulations.

Question 66

Transfer Pricing Dispute A disagreement between a taxpayer and tax authority over the appropriate transfer pricing methodology or adjustments.

Question 67

Mutual Agreement Procedure (MAP) A process for resolving transfer pricing disputes between tax authorities of different countries.

Question 68

OECD Transfer Pricing Guidelines Guidelines issued by the Organisation for Economic Co-operation and Development (OECD) for applying the arm's length principle.

Question 69

Base Erosion and Profit Shifting (BEPS) Strategies used by multinational companies to shift profits to low-tax jurisdictions

Answer 69

often addressed through transfer pricing regulations.

Question 70

Controlled Transaction A transaction between related parties

Answer 70

such as divisions within a multinational company.

Question 71

Uncontrolled Transaction A transaction between unrelated parties

Answer 71

used as a benchmark for determining arm's length prices.

Question 72

Comparable A transaction or company that is similar to the controlled transaction or company being analyzed for transfer pricing purposes.

Question 73

Market Price The price at which goods or services are sold between unrelated parties in the open market.

Question 74

Transfer Pricing Methodology The approach used to determine the arm's length price for a controlled transaction.

Question 75

Transfer Pricing Regulation Laws and rules governing the pricing of transactions between related parties.

Question 76

Transfer Pricing Compliance The process of ensuring that a company's transfer pricing practices adhere to applicable regulations and guidelines.

Question 77

Transfer Pricing Policy A company's internal guidelines and procedures for setting and documenting transfer prices.

Question 78

Transfer Pricing Adjustment An adjustment made by tax authorities to a company's transfer prices to ensure they comply with the arm's length principle.

Question 79

Transfer Pricing Risk The risk that a company's transfer pricing practices will be challenged by tax authorities

Answer 79

leading to adjustments and penalties.

Question 80

Transfer Pricing Penalty A financial penalty imposed by tax authorities for non-compliance with transfer pricing regulations.

Question 81

Transfer Pricing Dispute