Transfer pricing

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. What is the main reason for shifting profits from one country to another country?

  2. How many traditional methods are there for calculating a transfer price?

  3. Which of the following statements correctly defines an external comparable when establishing an uncontrolled price?

  4. Which is the most useful method for setting a transfer price when very little value is added by the company that sells the product outside the group?

  5. Which is the most useful method for setting a transfer price when the companies involved in a transaction are too integrated for it to be looked at from the viewpoint of just one company?

  6. What is the overriding problem with the three traditional methods when trying to set a transfer price?

  7. Why is the transaction net margin method particularly popular?

  8. Which of the following statements correctly describes the approach of customs authorities and direct taxation authorities when it comes to setting a transfer price?

  9. Which one of the following statements concerning double taxation is correct?

  10. When compared to a multilateral transfer pricing agreement, what is the main advantage of a unilateral agreement?