BENCHMARKING STUDY
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F A Q
What Is a Benchmarking Study?
It is an analysis of comparable companies or transactions used to assess the arm’s-length level of prices, profitability, or other financial indicators for transfer pricing purposes.
When Might a Company Need Benchmarking?
Benchmarking is used when analysing related-party transactions and may be required to substantiate the applied pricing model and prepare transfer pricing documentation.
How Is the Arm’s-Length Range Determined?
First, the transaction being analysed and the appropriate transfer pricing method are identified. Comparable data is then selected, comparability is assessed, and the relevant arm’s-length range is calculated.
What Transactions Can Be Analysed Using Benchmarking?
The analysis may be applied to intragroup services, financing, supplies of goods, licensing arrangements, and other related-party transactions. The methodology depends on the nature of the specific transaction.
Can a Benchmarking Study Be Used When Preparing a Local File?
Yes. Benchmarking results can be used to provide economic support for the terms of controlled transactions and included in transfer pricing documentation where applicable.
