An independent entity providing a financial guarantee would expect to receive a fee to compensate it for the risk it is taking in accepting the contingent liability and to reflect any value it is providing to the borrower in respect of the guarantee. However, it must be borne in mind that an independent guarantor’s charges will in part reflect costs incurred in the process of raising capital and in satisfying regulatory requirements. Those are costs which associated enterprises might not incur.
TPG2020 Chapter X paragraph 10.173
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By OECD
Category: OECD Transfer Pricing Guidelines (2017) | Tag: Comparable uncontrolled price method (CUP), Financial guarantee, Financial transactions, Pricing guarantees, Treasury functions
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