An Italian luxury watch and jewellery distributor was assessed by the Revenue Agency, which rejected its TNMM net cost plus benchmarking and substituted its own EBIT margin comparables from the AIDA database. The company argued the agency's comparability analysis failed to account for contractual terms, market conditions, and business strategies per OECD guidelines. Italy's Supreme Court ruled in favour of the taxpayer in November 2025 ... Read more

An Italian luxury watch and jewellery retailer purchased goods from its Swiss parent and reported losses, pricing transactions using the CUP method. The Italian Revenue Agency applied the TNMM with return on sales as the profit level indicator, issuing assessments totalling EUR 4.69 million. The company argued TNMM ranked lower in the method hierarchy and that losses stemmed from high rental costs. Italy's Supreme Court decided in favour of the tax authority in November 2025 ... Read more

A Korean subsidiary of a Dutch electronics multinational was assessed for excess transfer prices paid to foreign related parties across medical equipment, household appliances, and lighting segments. Tax authorities aggregated maintenance services with product sales and selected comparables based on domestic service businesses. The Korean Supreme Court remanded the case for reexamination in 2025, finding the comparable selection methodology required further review ... Read more

Nestlé Zambia Limited recorded continuous losses, prompting the Zambia Revenue Authority to issue a transfer pricing assessment. The Tax Appeals Tribunal had invalidated the assessment over unsuitable comparables and methods. On appeal, the Zambia Supreme Court ruled in 2025 that the burden of proof rests with the taxpayer to disprove assessments, deciding largely in favour of the ZRA while addressing comparability and distributor classification issues ... Read more

A Korean limited risk distributor importing and selling vehicles incurred substantial losses between 2017 and 2021 following a regulatory sales suspension, undertaking market penetration measures funded partly by parent reimbursements. The tax authority disputed the treatment of those compensations as non-operating income. The National Tax Tribunal upheld the authority's position in 2025, ruling that a limited risk distributor cannot bear market penetration costs and that parent reimbursements must be classified as operating income under the TNMM ... Read more

A Korean limited risk distributor importing and selling vehicles incurred substantial losses between 2017 and 2021 following a regulatory sales suspension, undertaking market penetration measures funded partly by parent reimbursements. The tax authority disputed the treatment of those compensations as non-operating income. The National Tax Tribunal upheld the authority's position in 2025, ruling that a limited risk distributor cannot bear market penetration costs and that parent reimbursements must be classified as operating income under the TNMM ... Read more

A Panamanian electronics distributor purchased all goods from related parties abroad and sold primarily to foreign customers in 2014. Tax authorities rejected the Resale Price Method, applied TNMM, and issued a supplementary assessment of approximately B/.546,700. The Administrative Court ruled in 2025 that Panama's transfer pricing regime could not apply to income exempt from corporate income tax, revoking the assessment and cancelling all surcharges in full ... Read more

A Panamanian electronics distributor purchased all goods from related parties abroad and sold primarily to foreign customers in 2014. Tax authorities rejected the Resale Price Method, applied TNMM, and issued a supplementary assessment of approximately B/.546,700. The Administrative Court ruled in 2025 that Panama's transfer pricing regime could not apply to income exempt from corporate income tax, revoking the assessment and cancelling all surcharges in full ... Read more

A Korean subsidiary importing medical equipment, appliances and lighting products from related parties was audited after tax authorities rejected its business-line segmentation and functional analysis. Authorities reclassified activities and selected new comparables, issuing additional assessments. The Korean High Court ruled in favour of the taxpayer in August 2024, finding the authority's segmentation and comparable selection flawed ... Read more

Israel's tax authority assessed eBay Marketplace Israel Ltd. as a limited risk distributor using TNMM with operating margin as the profit level indicator. The company appealed, challenging the comparability analysis. The District Court remanded the case in April 2024, directing the tax authority to reissue assessments with adjustments for profitability cycles, double-counted transactions, double taxation risks, platform value contributions, and revised comparable company selection ... Read more

A Korean subsidiary of a French luxury goods group imported products from a Hong Kong affiliate and applied the resale price method for transfer pricing purposes. The tax authority rejected the original application and issued a reassessment. Korea's Tax Tribunal upheld the RPM but ordered revised comparability adjustments. On re-investigation, the authority recalculated the arm's length range, issuing a partial refund, while the taxpayer's second appeal was dismissed in favour of the tax authority ... Read more

A Korean subsidiary of a French luxury goods group imported products from a Hong Kong affiliate and applied the resale price method for transfer pricing purposes. The tax authority rejected the original application and issued a reassessment. Korea's Tax Tribunal upheld the RPM but ordered revised comparability adjustments. On re-investigation, the authority recalculated the arm's length range, issuing a partial refund, while the taxpayer's second appeal was dismissed in favour of the tax authority ... Read more

A Korean IP-holding company allowed its subsidiaries to use trademarks, patents, and technical know-how in their distribution and manufacturing activities without charging royalties. The tax authorities assessed an arm's length royalty and added it to the parent's taxable income. The Seoul Appeals Commission dismissed the appeal in September 2023, upholding the adjustment on the basis that royalty-free use of valuable intangibles lacked economic rationality ... Read more

Eli Lilly ČR distributed pharmaceuticals at a loss, offset by marketing service fees from its Swiss principal, Eli Lilly Export S.A. The Czech tax authority assessed additional VAT, arguing the marketing services were not exempt from Czech VAT. Both the Administrative Court and the Supreme Administrative Court dismissed Eli Lilly's appeals in 2023, upholding the VAT assessment on the intra-group service income ... Read more

A Danish company's transfer pricing documentation was found materially deficient by the Court of Appeal in 2023, as it failed to describe how prices were determined or provide adequate information about the related flow-through entity's business activities. SKAT was entitled to issue a discretionary assessment. The court also upheld withholding tax liability on transfers treated as taxable dividends under Danish corporation tax rules ... Read more

A Polish fast-moving goods distributor operating under a unilateral advance pricing agreement sought an individual interpretation on whether intra-group service costs should be included in its operating margin calculation under TNMM. The tax authority disputed the treatment of aggregated transactions and cost allocation. Poland's Supreme Administrative Court ruled in favour of the taxpayer in March 2023, upholding the arm's length operating margin methodology ... Read more

A Spanish branch performing IT distribution and marketing activities was assessed by tax authorities who adjusted its income to the median of a TNMM benchmark range and disallowed intra-group service fee deductions. The branch appealed, and Spain's TEAC partially upheld the appeal in January 2023, finding deficiencies in the tax authority's comparability analysis and burden of proof regarding the interquartile range adjustment ... Read more

Eli Lilly ČR, acting as a limited-risk distributor and marketing services provider to its Swiss principal, was assessed VAT on marketing fees by Czech tax authorities, who disputed the place of supply classification. The District Court upheld the assessments, but in December 2022 the Czech Supreme Administrative Court reversed that decision, annulling the tax assessments and ruling in favour of the taxpayer ... Read more

Universal Pictures International Spain SL, a film distributor on the Spanish market, challenged a tax authority assessment comparing remuneration from related-party distributions to unrelated-party distributions. The Audiencia Nacional ruled mostly in favour of the taxpayer in 2022, finding the controlled transactions involved limited-risk distribution while uncontrolled transactions were full-risk, making them incomparable. However, the case was remitted for reconsideration due to concerns over the benchmark comparables used ... Read more

A Greek pharmaceutical distributor applied the resale price method for its intra-group sales and service activities, but the tax authorities rejected this in favour of TNMM and issued an additional taxable income assessment. The Administrative Tribunal largely upheld the assessment for sales activities, finding the company's net profit margin fell outside the interquartile range, but annulled the adjustment for service activities where remuneration was within the arm's length range ... Read more

A Korean company paid trademark royalties on its own consolidated sales but collected no royalties from its overseas sales subsidiaries for their use of the trademark. The tax authority added royalty income to the company's taxable income. The Seoul Appeals Commission upheld the assessment in 2022, rejecting arguments that the subsidiaries' limited-risk distributor status and capped profit margins meant the economic benefits of the trademark accrued solely to the parent ... Read more

Avery Dennison Chile S.A. used a full-range resale price minus method to price its distribution activities and placed surplus capital with a Luxembourg group entity at 0.79% interest. Chilean tax authorities challenged both, issuing an assessment. The Tax Tribunal found in the taxpayer's favour in March 2021, and Chile's Court of Appeal upheld that decision in May 2022, ruling the tax authority had not proved the transactions departed from arm's length conditions ... Read more

Procter & Gamble Malaysia purchased consumer goods from a related Singapore entity under a distribution agreement guaranteeing a 2.25% margin. The Malaysian tax authority recharacterised the company as a fully-fledged distributor, adjusted results to the median, and imposed RM 44.6 million in additional tax and penalties. The Special Commissioners and Malaysia's High Court in 2022 ruled in favour of the taxpayer, finding the recharacterisation and median adjustment unsupported ... Read more

Procter & Gamble Malaysia purchased consumer goods from a related Singapore entity under a distribution agreement guaranteeing a 2.25% margin. The Malaysian tax authority recharacterised the company as a fully-fledged distributor, adjusted results to the median, and imposed RM 44.6 million in additional tax and penalties. The Special Commissioners and Malaysia's High Court in 2022 ruled in favour of the taxpayer, finding the recharacterisation and median adjustment unsupported ... Read more

A Swedish pharmaceutical company transferred the Restylane trademark to a Swiss related party and operated limited risk distribution in China. The Swedish Tax Agency challenged the valuation of the trademark transfer in 2011 and the arm's length remuneration for distribution in 2013–2014. The Administrative Court of Appeal upheld the tax authority's adjustments, finding independent parties would have used more recent sales figures, resulting in a significantly higher arm's length trademark value ... Read more

Delsey España, a Spanish subsidiary of the French Delsey group distributing travel goods, was audited for transfer pricing compliance for FY 2011–2014 after reporting losses from 2005–2010. The Spanish tax authority rejected the taxpayer's CUP and RPM methods and applied TNMM instead, adjusting profits upward. The Tribunal Superior de Justicia de Cataluña dismissed the taxpayer's appeal in 2022, fully upholding the tax authority's assessment ... Read more

42. The facts in this example are the same as those set out in Example 10 with the following additions: At the end of Year 3, Primair stops manufacturing watches and contracts with a third party to manufacture them on its behalf. As a result, Company S will import unbranded watches directly from the manufacturer and undertake secondary processing to apply the R name and logo and package the watches before sale to the final customer. It will then sell and distribute the watches in the manner described in Example 10. As a consequence, at the beginning of Year 4, Primair and Company S renegotiate their earlier agreement and enter into a new long term licensing agreement. The new agreement, to start at the beginning of Year 4, is for five years, with Company S having an option for a further five years. Under the new agreement, Company S is granted the exclusive right within country Y to process, market ... Read more

39. The facts in this example are the same as in Example 9 with the following additions: By the end of Year 3, the R brand is successfully established in the country Y market and Primair and Company S renegotiate their earlier agreement and enter into a new long-term licensing agreement. The new agreement, which is to commence at the beginning of Year 4, is for five years with Company S having an option for a further five years. Under this agreement, Company S agrees to pay a royalty to Primair based on the gross sales of all watches bearing the R trademark. In all other respects, the new agreement has the same terms and conditions as in the previous arrangement between the parties. There is no adjustment made to the price payable by Company S for the branded watches as a result of the introduction of the royalty. Company S’s sales of R brand watches in Years 4 and ... Read more

35. The facts in this example are the same as in Example 9, except that Company S now enters into a three-year royalty-free agreement to market and distribute the watches in the country Y market, with no option to renew. At the end of the three-year period, Company S does not enter into a new contract with Primair. 36. Assume that it is demonstrated that independent enterprises do enter into short-term distribution agreements where they incur marketing and distribution expenses, but only where they stand to earn a reward commensurate with the functions performed, the assets used, and the risks assumed within the time period of the contract. Evidence derived from comparable independent enterprises shows that they do not invest large sums of money in developing marketing and distribution infrastructure where they obtain only a short-term marketing and distribution agreement, with the attendant risk of non-renewal without compensation. The potential short-term nature of the marketing and distribution agreement is such ... Read more

26. The facts in this example are the same as in Example 8, except as follows: Under the contract between Primair and Company S, Company S is now obligated to develop and execute the marketing plan for country Y without detailed control of specific elements of the plan by Primair. Company S bears the costs and assumes certain of the risks associated with the marketing activities. The agreement between Primair and Company S does not specify the amount of marketing expenditure Company S is expected to incur, only that Company S is required to use its best efforts to market the watches. Company S receives no direct reimbursement from Primair in respect of any expenditure it incurs, nor does it receive any other indirect or implied compensation from Primair, and Company S expects to earn its reward solely from its profit from the sale of R brand watches to third party customers in the country Y market. A thorough functional ... Read more

20. Primair, a resident of country X, manufactures watches which are marketed in many countries around the world under the R trademark and trade name. Primair is the registered owner of the R trademark and trade name. The R name is widely known in countries where the watches are sold and has obtained considerable economic value in those markets through the efforts of Primair. R watches have never been marketed in country Y, however, and the R name is not known in the country Y market. 21. In Year 1, Primair decides to enter the country Y market and incorporates a wholly owned subsidiary in country Y, Company S, to act as its distributor in country Y. At the same time, Primair enters into a long-term royalty-free marketing and distribution agreement with Company S. Under the agreement, Company S is granted the exclusive right to market and distribute watches bearing the R trademark and using the R trade name in ... Read more

16. Primero is the parent company of an MNE group engaged in the pharmaceutical business and does business in country M. Primero develops patents and other intangibles relating to Product X and registers those patents in countries around the world. 17. Primero retains its wholly owned country N subsidiary, Company S, to distribute Product X throughout Europe and the Middle East on a limited risk basis. The distribution agreement provides that Primero, and not Company S, is to bear product recall and product liability risk, and provides further that Primero will be entitled to all profit or loss from selling Product X in the territory after providing Company S with the agreed level of compensation for its distribution functions. Operating under the contract, Company S purchases Product X from Primero and resells Product X to independent customers in countries throughout its geographical area of operation. In performing its distribution functions, Company S follows all applicable regulatory requirements. 18. In the ... Read more

The selection and application of a transfer pricing method to post-restructuring controlled transactions must derive from the analysis of the economically relevant characteristics of the controlled transaction as accurately delineated. It is essential to understand what the functions, assets and risks involved in the post-restructuring transactions are, and what party performs, uses or assumes them. This requires information to be available on the functions, assets and risks of both parties to a transaction, e.g. the restructured entity and the foreign associated enterprise with which it transacts. The analysis should go beyond the label assigned to the restructured entity, as an entity that is labelled as a “commissionnaire” or “limited risk distributor” can sometimes be found to own valuable local intangibles and to continue to assume significant market risks, and an entity that is labelled as a “contract manufacturer” can sometimes be found to pursue significant development activities or to own and use unique intangibles. In post-restructuring situations, particular attention should ... Read more

Where a restructuring involves a transfer to a foreign associated enterprise of risks that were previously assumed by a taxpayer, it may be important to examine whether the transfer of risks only concerns the future risks that will arise from the post-restructuring activities or also the risks existing at the time of the restructuring as a result of pre-conversion activities, i.e. there is a cut-off issue. For instance, consider a situation in which a distributor was assuming bad debt risks which it will no longer assume after its being restructured as a “limited risk distributor”, and that it is being compared with a long-established “limited risk distributor” that never assumed bad debt risk. It may be important when comparing both situations to examine, based on the guidance in Section D. 1.2.1 of Chapter I, whether the “limited risk distributor” that results from a conversion still assumes the risks associated with bad debts that arose before the restructuring at the time ... Read more

When one compares a situation where a long-established full-fledged distributor is converted into a limited risk distributor with a situation where a limited risk distributor has been in existence in the market for the same duration, there might also be differences because the full-fledged distributor may have performed some functions, borne some expenses (e.g. marketing expenses), assumed some risks and contributed to the development of some intangibles before its conversion that the long-existing “limited risk distributor” may not have performed, borne, assumed or contributed to. The question arises whether at arm’s length such additional functions, assets and risks should only affect the remuneration of the distributor before its being converted, whether they should be taken into account to determine a remuneration of the transfers that take place upon the conversion (and if so how), whether they should affect the remuneration of the restructured limited risk distributor (and if so how), or a combination of these three possibilities. For instance, if ... Read more

Some differences in the starting position of the restructured entity compared to the position of a newly set up operation can relate to the established presence of the operation. For instance, if one compares a situation where a long-established full-fledged distributor is converted into a limited risk distributor with a situation where a limited risk distributor is established in a market where the group did not have any previous commercial presence, market penetration efforts might be needed for the new entrant which are not needed for the converted entity. This may affect the comparability analysis and the determination of the arm’s length remuneration in both situations ... Read more

Where an arrangement between associated enterprises replaces an existing arrangement (restructuring), there may be factual differences in the starting position of the restructured entity compared to the position of a newly set up operation. Sometimes, the post-restructuring arrangement is negotiated between parties that have had prior contractual and commercial relationships. In such a situation, depending on the facts and circumstances of the case and in particular on the rights and obligations derived by the parties from these prior arrangements, this may affect the options realistically available to the parties in negotiating the terms of the new arrangement and therefore the conditions of the restructuring and of the post-restructuring arrangements (see paragraphs 9.27-9.31 for a discussion of options realistically available in the context of determining the arm’s length compensation for the restructuring itself). For instance, assume a party has proved in the past to be able to perform well as a full-fledged distributor performing a whole range of marketing and selling ... Read more

In particular, in the case of the conversion of a full-fledged distributor into, for example, a limited risk distributor or commissionnaire, it may be important to examine whether the distributor has developed local marketing intangibles over the years prior to its being restructured and if so, what the nature and the value of these intangibles are, and whether they were transferred to an associated enterprise. Where such local intangibles are found to be in existence and to be transferred to a foreign associated enterprise, the arm’s length principle should apply to determine whether and if so how to compensate such a transfer, based on what would be agreed between independent parties in comparable circumstances. In this regard it is relevant to note that the transferor should receive arm’s length compensation (in addition to the arm’s length compensation for the transferred intangibles) when after the restructuring it continues to perform functions related to the development, enhancement, maintenance, protection or exploitation of ... Read more

Where a local full-fledged operation is converted into an operation assuming limited risk, using limited intangibles and receiving low remuneration, the questions arise of whether this conversion entails the transfer by the restructured local entity to a foreign associated enterprise of valuable intangibles or rights in intangibles and whether there are local intangibles that remain with the local operation ... Read more

At arm’s length, the response is likely to depend on the rights and other assets of the parties, on the profit potential of the distributor and of its associated enterprise in relation to both business models (full-fledged and low risk distributor) as well as the expected duration of the new arrangement. In particular, in evaluating profit potential, it is necessary to evaluate whether historic profits (determined in accordance with the arm’s length principle) are an indicator of future profit potential, or whether there have been changes in the business environment around the time of the restructuring that mean that past performance is not an indicator of profit potential. For example, competing products could have the effect of eroding profitability, and new technology or consumer preferences could render the products less attractive. The consideration of these factors from perspective of the distributor can be illustrated with the following example ... Read more

As another example, assume a full-fledged distributor is operating under a long term contractual arrangement for a given type of transaction. Assume that, based on its rights under the long term contract with respect to these transactions, it has the option realistically available to it to accept or refuse being converted into a limited risk distributor operating for a foreign associated enterprise, and that an arm’s length remuneration for such a low risk distribution activity is estimated to be a stable profit of +2% per year while the excess profit potential associated with the risks would now be attributed to the foreign associated enterprise. Assume for the purpose of this example that the restructuring leads to the renegotiation of the existing contractual arrangements, but it does not entail the transfer of assets other than its rights under the long term contract. From the perspective of the distributor, the question arises as to whether the new arrangement (taking into account both ... Read more

For instance, where a full-fledged distributor is converted into a limited-risk distributor or commissionnaire resulting in the reduction or elimination of risks relating to inventory in the restructured enterprise, in order to determine whether such risk is economically significant the tax administration may want to analyse: The role of inventory in the business model (for example, speed to market, comprehensive range), The nature of the inventory (for example, spare parts, fresh flowers), The level of investment in inventory, The factors giving rise to inventory write-downs or obsolescence (for example, perishability, pricing pressures, speed of technical improvements, market conditions), The history of write-down and stock obsolescence, and whether any commercial changes affect the reliability of historic performance as an indicator of current risk, The cost of insuring against damage or loss of inventory, and The history of damage or loss (if uninsured) ... Read more

A second example relates to the purported transfer of credit risk as part of a business restructuring. The analysis under Section D. 1.2.1 of Chapter I would take into account the contractual terms before and after the restructuring, but would also examine how the parties operate in relation to the risk before and after the restructuring. The analysis would then examine whether the party that contractually assumes the risk controls the risk in practice through relevant capability and decision-making as defined in paragraph 1.65 and has the financial capacity to assume such risk as defined in paragraph 1.64. It is important to note that a party that before the restructuring did not assume a risk under the analysis of Section D. 1.2.1 of Chapter I cannot transfer it to another party, and a party that after the restructuring does not assume a risk under the analysis of Section D. 1.2.1 of Chapter I should not be allocated the profit potential ... Read more

Risks are of critical importance in the context of business restructurings. Usually, in the open market, the assumption of risk associated with a commercial opportunity affects the profit potential of that opportunity, and the allocation of risk assumed between the parties to the arrangement affects how profits or losses resulting from the transaction are allocated through the arm’s length pricing of the transaction. Business restructurings often result in local operations being converted into low risk operations (e.g. “low risk distributors”, or “low risk contract manufacturers”) and being remunerated with a relatively low (but generally stable) return on the grounds that the economically significant risks are assumed by another party to which the profits or losses associated with those risks are allocated. For this reason, an examination of the allocation of risks between associated enterprises before and after the restructuring is an essential part of the functional analysis. Such analysis should allow tax administrations to assess the transfer of the economically ... Read more

Restructurings can take a variety of different forms and may involve two or more members of an MNE group. For example, a simple pre-restructuring arrangement could involve a full-fledged manufacturer producing goods and selling them to an associated full-fledged distributor for on-sale into the market. The restructuring could involve a modification to that two-party arrangement, whereby the distributor is converted to a limited risk distributor or commissionnaire, with risks previously assumed by the full-fledged distributor being assumed by the manufacturer (taking into account the guidance in Section D. 1 of Chapter I. Frequently, the restructuring will be more complicated, with functions performed, assets used and risks assumed by either or both parties to a pre-restructuring arrangement shifting to one or more members of the group ... Read more

For example, a tested party engaged in the marketing and distribution of goods purchased in controlled transactions may have developed marketing intangibles in its geographic area of operation, including customer lists, customer relationships, and customer data. It may also have developed advantageous logistical know-how or software and other tools that it uses in conducting its distribution business. The impact of such intangibles on the profitability of the tested party should be considered in conducting a comparability analysis ... Read more

In a transfer pricing analysis where the most appropriate transfer pricing method is the resale price method, the cost-plus method, or the transactional net margin method, the less complex of the parties to the controlled transaction is often selected as the tested party. In many cases, an arm’s length price or level of profit for the tested party can be determined without the need to value the intangibles used in connection with the transaction. That would generally be the case where only the non-tested party uses intangibles. In some cases, however, the tested party may in fact use intangibles notwithstanding its relatively less complex operations. Similarly, parties to potentially comparable uncontrolled transactions may use intangibles. Where either of these is the case, it becomes necessary to consider the intangibles used by the tested party and by the parties to potentially comparable uncontrolled transactions as one comparability factor in the analysis ... Read more

This section provides supplemental guidance for applying the rules of Chapters I – III in situations where one or both parties to a controlled transaction uses intangibles in connection with the sale of goods or the provision of services, but where no transfer of intangibles or interests in intangibles occurs. Where intangibles are present, the transfer pricing analysis must carefully consider the effect of the intangibles involved on the prices and other conditions of controlled transactions ... Read more

The need to consider the use of intangibles by a party to a controlled transaction involving a sale of goods can be illustrated as follows. Assume that a car manufacturer uses valuable proprietary patents to manufacture the cars that it then sells to associated distributors. Assume that the patents significantly contribute to the value of the cars. The patents and the value they contribute should be identified and taken into account in the comparability analysis of the transaction consisting in the sales of cars by the car manufacturer to its associated distributors, in selecting the most appropriate transfer pricing method for the transactions, and in selecting the tested party. The associated distributors purchasing the cars do not, however, acquire any right in the manufacturer’s patents. In such a case, the patents are used in the manufacturing and may affect the value of the cars, but the patents themselves are not transferred ... Read more

The resale price method begins with the price at which a product that has been purchased from an associated enterprise is resold to an independent enterprise. This price (the resale price) is then reduced by an appropriate gross margin on this price (the “resale price margin”) representing the amount out of which the reseller would seek to cover its selling and other operating expenses and, in the light of the functions performed (taking into account assets used and risks assumed), make an appropriate profit. What is left after subtracting the gross margin can be regarded, after adjustment for other costs associated with the purchase of the product (e.g. customs duties), as an arm’s length price for the original transfer of property between the associated enterprises. This method is probably most useful where it is applied to marketing operations ... Read more