Functional analysis is required for determining whether controlled and uncontrolled transactions or entities are comparable while considering assets used and risks assumed by related parties. Functional analysis includes nature of the transactions surrounded by the risks, assets, facts and circumventions, macro, micro, legal and business environment, transaction flows, allocation of functions, assets and risks among the associated entities involved in the transactions.
Functional analysis of GRANIT focuses on comparability factors:
• Organization, Operations (History, Definition and Scope)
• Sector and Market Conditions, and Economic Circumstances
• Related Parties
• Business Strategies Pursued by the Related Parties
• Compensation, Contractual Terms and Details of Transactions Carried out between Related Parties, Legal Rights and Obligations of Each Party
• Assets owned, economic functions performed and risks faced by the related parties
Necessay adjustments are made for any material differences from the functions undertaken by any uncontrolled enterprises with which that party is being compared.
* Functions performed, risks assumed and asset employed,
* Analysis of responsibility centers, expense centers, cost centers, revenue centers, profit centers and investment centers,
* Analysis of business processes; procurement, intake and trading, processing, marketing and sales, logistics,
* Tangible Assets and Intangible Assets (IP)
* Risks of product liability, operating, warranty, market, currency, inventory, credit, capacity, liquidity, logistics and environmental
More information about Transfer Pricing can be found on the Transfer Pricing information site which can be found at;