ADJUSTING THE COMPARABILITY PARAMETERS OF TRANSACTIONS FOR TRANSFER PRICING PURPOSES

The article defines the relevance of the fight against money laundering and tax evasion, generalizes in strengthening control over transfer pricing. It is substantiated that one of the main problems of application of transfer pricing methods is analysis of potentially comparable transactions that have certain differences from controlled transactions, generates the need for qualitative adjustments of comparability. The main details of applying all types of adjustments to the conditions of transactions in order to make them comparable are disclosed. The sequence of application of the following adjustments is disclosed: adjustments for payment terms; adjustments for delivery terms; adjustments for currency of settlement; adjustments for volume; adjustments for contract terms (bringing futures to spots) adjustments for working capital. It is proved that when applying the net profit method for price control it is reasonable to make adjustments to profitability indicators to level out the significant differences in accounts receivable, accounts payable, inventories according to the analyzed company and potentially comparable company. It is noted that comparability adjustments are appropriate only for differences that would have a material impact on the comparison. Some differences consistently exist between the comparability attributes of controlled transactions of a taxpayer and a third party. Comparison may be appropriate despite an uncorrected difference, provided the difference does not have a material effect on the reliability of the comparison. The article also investigates the basic parameters of comparability of transactions, discloses the problems of applying adjustments, analyzes the procedure for applying adjustments, and provides relevant mechanisms for the most common adjustments that can be applied by taxpayers when preparing transfer pricing documentation.