Contents - AL-Tax

Contents1 Introduction .................................................. 1Part I Economic and Accounting Rates and Concepts ShouldNot be Conflated2 Economic vs. Accounting Profit Rates ............................ 73 Overview and Critique of Existing Transfer Pricing Methods ....... 113.1 ComparableProfitsMethodandTNMM....................... 113.1.1 DescriptionofCPMandTNMM ...................... 123.1.2 Circumstances when CPM and TNMM Are Applied . . . . . . 143.1.3 Underlying Economic Rationale . . . . . .................. 143.1.4 Critique of Economic Reasoning . . . . .................. 153.1.5 SummaryandPracticalImplications ................... 173.2 Resale Price and Cost Plus Methods . ......................... 173.2.1 Circumstances when Resale Price and Cost PlusMethods Apply . . . . . ............................... 183.2.2 Description of Resale Price and Cost Plus Methods . . . . . . . 193.2.3 Underlying Economic Rationale . . . . . .................. 193.2.4 Critique of Economic Reasoning . . . . .................. 203.2.5 SummaryandPracticalImplications ................... 213.3 Comparable Uncontrolled Price Method . . . . . .................. 223.3.1 Description of Comparable Uncontrolled Price Method . . . 223.3.2 Underlying Economic Rationale . . . . . .................. 233.3.3 Critique of Economic Reasoning . . . . .................. 233.3.4 SummaryandPracticalImplications ................... 263.4 ServicesCostMethod ...................................... 263.4.1 DescriptionofServicesCostMethod................... 273.4.2 Rationale for Services Cost Method . . .................. 283.5 Profit Split Methods . . . . .................................... 293.5.1 Residual Profit Split Method . ......................... 293.5.2 ComparableProfitSplitMethod....................... 31ix