Post by account_disabled on Mar 16, 2024 3:43:13 GMT -6
The is the method in which the arms length principle is applied most directly and reliably in terms of determining the arms length price or price. QFD has an advantage over other methods as it is the most reliable and most directly usable method in finding the comparable price. However the method also has some strengths and weaknesses. These can be summarized as follows Strengths Weaknesses Having preference Difficulty finding precedent.
The most reliable and most directly usable method Product focused work Not being affected by differences in function and risk Price changes easily for various reasons Easily applicable if the product sold is the same Obligation to correct differences between products Difficult to B TO B Database measure items that need to be fixed Unusable without correction It is important for this method to take into account all conditions and factors that materially affect the price such as the characteristics of the products the location of the market the trading level of the companies and the risks taken. However attention should also be paid to the impact of the functions performed by related parties on the price.
In other words when determining transfer prices attention should be paid not only to the prices but also to the extent necessary to the functions performed by the parties the risks they undertake and the assets they use. In order for the method to work a transaction must have been carried out between the company in question and a person who is not related as a third party or a transaction of the same type must have been carried out between third parties. Additionally classifying the differences between controlled and uncontrolled processes is important for the application of the method. Especially if there are prices with registered prices such as raw materials or prices quoted on trade or commodity exchanges it is possible for related parties to use the comparable price method in their purchase.
The most reliable and most directly usable method Product focused work Not being affected by differences in function and risk Price changes easily for various reasons Easily applicable if the product sold is the same Obligation to correct differences between products Difficult to B TO B Database measure items that need to be fixed Unusable without correction It is important for this method to take into account all conditions and factors that materially affect the price such as the characteristics of the products the location of the market the trading level of the companies and the risks taken. However attention should also be paid to the impact of the functions performed by related parties on the price.
In other words when determining transfer prices attention should be paid not only to the prices but also to the extent necessary to the functions performed by the parties the risks they undertake and the assets they use. In order for the method to work a transaction must have been carried out between the company in question and a person who is not related as a third party or a transaction of the same type must have been carried out between third parties. Additionally classifying the differences between controlled and uncontrolled processes is important for the application of the method. Especially if there are prices with registered prices such as raw materials or prices quoted on trade or commodity exchanges it is possible for related parties to use the comparable price method in their purchase.