Third, adjustments for accounting consistency may be required to improve comparability. Adjustments for accounting consistency are designed to eliminate the effect of differing accounting practices between the controlled and uncontrolled transactions and should be considered if and only if they are expected to increase the reliability of the results of a comparability analysis.32 In some cases, if exceptional costs arising from COVID-19 may be accounted for as either operating or non-operating items by different taxpayers in different transactions, then comparability adjustments may be In other cases there can be differences in whether the COVID-19 related costs are taken into account above or below the gross profit line. For instance, the recognition of the purchase of PPE as an operating cost by the tested party and as a cost of goods sold by a comparable may have a significant impact when computing a profit level indicator based on gross profit and may require a comparability adjustment.
OECD COVID-19 TPG paragraph 54
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By OECD
Category: OECD Transfer Pricing Guidelines (2017) | Tag: Above or below the gross profit line, Accounting consistency, Comparability adjustments, Comparability analysis, Comparable cost basis, COVID-19, COVID-19 specific costs, Losses
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