Do you need to prepare a benchmarking study when entering into a related party transaction?
Learning Centre • Transfer Pricing Faqs • Do you need to prepare a benchmarking study when entering into a related party transaction?
Learning Centre • Transfer Pricing Faqs • 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 is the best avenue and practice
to support your transfer pricing position and manage your transfer pricing risk.
When inflation is high, the cost of goods and services increases, so the prices of those goods and services must also increase to reflect the higher costs.
