The role of comparable company benchmarks in transfer pricing

Abstract

The OECD consultation on the use of comparable company benchmarks in transfer pricing raises fundamental issues about traditional pricing methods and approaches. There are severe limitations to comparable company analysis arising from the structure of the world economy and the difficulty of obtaining the commercial and financial information which is necessary in order to undertake a reliable analysis. As a result, less emphasis should be placed on transfer pricing approaches focusing on one party to a transaction and on the transaction net margin method. Experience suggests a number of areas on which it would be helpful to have more guidance on the application of comparable company analysis.