ECONOMICS

Detailed explanation-1: -The OECD Transfer Pricing Guidelines provide guidance on the application of the “arm’s length principle", which represents the international consensus on the valuation, for income tax purposes, of cross-border transactions between associated enterprises.

Detailed explanation-2: -Functional, asset and risk analysis is often referred to as FAR analysis.

Detailed explanation-3: -Methods acknowledge by the OECD The five methods approved by the OECD are the comparable uncontrolled price (CUP) method, resale price method (RPM), cost plus method (CPM), transactional net margin method (TNMM) and the transactional profit split method (TPSM).

Detailed explanation-4: -Intangible assets are assets that do not have a physical or financial embodiment. Termed ‘intellectual assets’ in previous OECD work, intangible assets have also been referred to as knowledge assets or intellectual capital. Much of the focus on intangibles has been on R&D, key personnel and software.