Arm’s length interest rates can also be based on the return of realistic alternative transactions with comparable economic characteristics. Depending on the facts and circumstances, realistic alternatives to intra-group loans could be, for instance, bond issuances, loans which are uncontrolled transactions, deposits, convertible debentures, commercial papers, etc. In the evaluation of those alternatives as potential comparables it is important to bear in mind that, based on facts and circumstances, comparability adjustments may be required to eliminate the material effects of differences between the controlled intra-group loan and the selected alternative in terms of, for instance, liquidity, maturity, existence of collateral or currency.
TPG2022 Chapter X paragraph 10.93
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By OECD
Category: OECD Transfer Pricing Guidelines (2022), Options Realistically Available, TPG2022 Chapter X: Transfer Pricing Aspects of Financial Transactions | Tag: Comparability adjustments, Comparable data, Comparable Uncontrolled Price method (CUP), Financial transactions, Interest rate, Intra-group loan, Loan, Options realistically available
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Supplemental Guidance
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