The arm’s length price of a transaction is defined by choosing and employing common appropriate practices as stipulated under Articles 6 and 7 of Transfer Pricing Bylaws that implement the most credible measures of an arm’s length result under specified facts and conditions:
- Comparable Uncontrolled Price (“CUP”) Method
- Resale Price Method
- Cost Plus Pricing Method
- Transactional Net Margin Method (“TNMM”)
- Transactional Profit Split Method.
It should be taken into consideration that the most suitable method should be chosen in line with the following factors:
- Appropriateness of the applied methods for the transaction
- Availability of all substantial information needed to implement the transfer pricing method
- Level of comparability required based on the method
- The extent to which transactions between related persons and transactions are similar for the purpose of comparison.