The application of the cost of funds approach requires consideration of the options realistically available to the borrower. On prevailing facts and circumstances, a borrowing MNE would not enter into a transaction priced under the cost of funds approach if it could obtain the funding under better conditions by entering into an alternative transaction.
TPG2022 Chapter X paragraph 10.99
Posted on | By OECD
Category: OECD Transfer Pricing Guidelines (2022), TPG2022 Chapter X: Transfer Pricing Aspects of Financial Transactions | Tag: Borrowing costs of lender, Cost of funds approach, Financial transactions, Interest rate, Intra-group loan, Loan, Options realistically available, Treasury functions
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