ECONOMICS

Detailed explanation-1: -Functional, asset and risk analysis is often referred to as FAR analysis.

Detailed explanation-2: -This exercise is known as Function, Asses and Risk (“FAR”) analysis. This analysis forms the basis and provides a framework for comparability study and subsequent determination of the most appropriate method. It assists in proper assessment of comparability for the purpose of Arm’s length study.

Detailed explanation-3: -Transfer pricing allows for the establishment of prices for the goods and services exchanged between subsidiaries, affiliates, or commonly controlled companies that are part of the same larger enterprise. Transfer pricing can lead to tax savings for corporations, though tax authorities may contest their claims.

Detailed explanation-4: -Functional analysis, the heart of your transfer pricing work, provides the building blocks to understand where value is being created. The process will enable you to identify companies that are performing similar functions, bearing similar levels of risk, and holding similar levels of assets.