Benchmarking / Economic Analysis
Our economic analysis is based on;
- Comparables search,
- Selection of comparables and database,
- Analysis of comparable company results for an arm’s lenghts compensation
Economic analysis is performed just after the study on;
- Price settings, price and/or profit checking,
- Transfer price calculation
- Selection of the most appropriate TP method
Since, the arm’s length principle is based on comparisons of the conditions of controlled and uncontrolled transactions; economic analysis is required for the assessment of comparability of the controlled transactions and the uncontrolled transactions. Internal comparables for economic analysis are price at the economic transactions carried out between the taxpayer and an unrelated party. External comparables are prices at the comparable transactions carried out between unrelated parties in the free market circumventions.Economic analysis also covers the factors determining comparability; such as characteristics of the properties and services, tangibles, intangibles, type, quality, availability, the nature of the services, and the form of the transactions.
In making economic analysis or comparisons, material differences between the compared transactions or enterprises should be taken into account. Necessary accurate adjustments are made if material differences are detected between controlled and uncontrolled transaction and these differences can materially affect the accuracy of comparability. In such cases, adjustment is required to eliminate the material effect of any differences to assess the best transfer pricing method to verify the controlled transactions among prescribed methods in the Turkish transfer pricing rules.
The benchmarking analysis also includes, any adjustments for functional differences (including inventory policies/risks, etc.), preparation of search matrix, financial data, business description appendices, and etc., in addition to the actual write-up of the analysis.
More information please contact with one of our partners.