Blog

The EdgarStat Blog explores issues in transfer pricing and application of the transactional net margin method (TNMM or CPM in the US) and other enterprise profit-based methods.

Intercompany Management Fees: CUP v. CPM (TNMM)
October 19, 2022 by Harold McClure

Transfer pricing practitioners in the US as well as in other nations often face the dilemma that clients wish to establish intercompany management fees as a percentage of revenues while tax authorities may test the implied cost plus from any intercompany management policy.

Topics: TNMM/CPM Intercompany Services Management Fees CUP State Transfer Pricing

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Tutorial: Country Risk Adjustment in Intercompany Financing
May 26, 2022 by John Hollas

One of the most challenging transfer pricing issues regarding financial transactions is making a comparability adjustment for differences in country risk between the tested non-US borrower’s country and the comparable US borrower's country in pricing the intercompany loan interest rate.

Topics: CUFT State Transfer Pricing Adjustments Intercompany Financing Arm's Length Interest Rates

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Mechanical Applications of the Comparable Profits Method are Unreliable
July 15, 2021 by Harold McClure

Applied properly, the Comparable Profits Method (CPM) can be a useful approach for well-defined transfer pricing issues, such as the appropriate profitability of a sales affiliate. Unfortunately, CPM is often applied mechanically without regard for economic principles and functional comparability.

Topics: Benchmarking Profit Indicators TNMM/CPM Tax Policy State Transfer Pricing

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States Should Learn from Transfer Pricing History, but Focus on The Right Lessons
March 04, 2021 by Harold McClure

A recent article asserted that state tax authorities should use the Comparable Profits Method (CPM) with care in the evaluation of transfer pricing for tangible goods. However, some of the examples cited, including the recent Coca Cola case, in their piece are misplaced for reasons we will address.

Topics: TNMM/CPM Tax Controversy Tax Policy State Transfer Pricing

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