Home • Insights • Benchmarking Insights: Do you need to prepare a benchmarking study when entering into a related party transaction?
Whether you need to prepare a benchmarking study when entering into a related party transaction depends on the country's transfer
pricing regulations and the specifics of the transaction.
In general, benchmarking studies are used to demonstrate that related party transactions are conducted on an arm's length basis, meaning
that they are comparable to those that would have taken place between independent parties under similar circumstances. If the transaction is
subject to transfer pricing regulations, the tax authorities will request a benchmarking study as part of the transfer pricing documentation
during an audit.
For good transfer pricing governance, it is recommended to keep appropriate documentation
and records to support the arm's length nature of your transactions, in case of any future scrutiny by the tax authorities. A
benchmark study as part of the transfer pricing documentation is part best practices to support your transfer pricing position and manage
your transfer pricing risk.
Transfer Pricing Solutions is a boutique transfer pricing firm who works directly with your team, applying our experience and expertise in transfer pricing to provide, prepare, document and assist in defending your international related party transactions. Our purpose is to make a difference in the service we provide to our clients by being practical, proactive and cost effective.
We can assist your clients with the planning and preparation of transfer pricing documentation, country by country (CbC) reporting,
comprehensive transfer pricing policy, performing global and local benchmarking comparable searches, providing training designed for CFOs
and tax teams and performing transfer pricing controversy and audits.
The introduction of corporate taxes in Gulf States countries means that TP rules have gained importance in the region, and approaches taken in Southeast Asia.
Misalignments with regulations, discrepancies in data, and evolving interpretations of arm's length principles can all trigger disputes, potentially leading to significant financial implications.
The ATO has tightened CbC reporting rules for MNEs, effective January 1, 2025, significantly increasing compliance costs and obligations. Key changes include the elimination of most self-assessed exemptions, requiring formal requests with detailed evidence, and reduced administrative relief for local file reporting.
