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Transfer pricing
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====Comparable uncontrolled price (CUP) method==== The comparable uncontrolled price (CUP) method is a transactional method that determines the arm's-length price using the prices charged in comparable transactions between unrelated parties.<ref>OECD Guidelines 2.13.</ref> In principle, the OECD<ref>OECD Guidelines 2.3, 2.14.</ref> and most countries that follow the OECD guidelines<ref>See, for example, [http://www.cra-arc.gc.ca/E/pub/tp/ic87-2r/ic87-2r-e.html Canada Revenue Agency (CRA) Information Circular 87-2R] at [http://www.cra-arc.gc.ca/E/pub/tp/ic87-2r/ic87-2r-e.html#P196_20259 paragraphs 52-53], and [http://law.ato.gov.au/atolaw/view.htm?Docid=TXR/TR9720/NAT/ATO/00001 Australian Taxation Office (ATO) Taxation Ruling 97/20] at [http://law.ato.gov.au/atolaw/view.htm?Docid=TXR/TR9720/NAT/ATO/00001#P3.15 paragraph 3.15].</ref> consider the CUP method to be the most direct method, provided that any differences between the controlled and uncontrolled transactions have no material effect on price or their effects can be estimated and corresponding price adjustments can be made. Adjustments may be appropriate where the controlled and uncontrolled transactions differ only in volume or terms; for example, an interest adjustment could be applied where the only difference is time for payment (e.g., 30 days vs. 60 days). For undifferentiated products such as commodities, price data for arm's-length transactions ("external comparables") between two or more other unrelated parties may be available. For other transactions, it may be possible to use comparable transactions ("internal comparables") between the controlled party and unrelated parties. The criteria for reliably applying the CUP method are often impossible to satisfy for licenses and other transactions involving unique intangible property,<ref>OECD (2015). [http://www.oecd.org/tax/aligning-transfer-pricing-outcomes-with-value-creation-actions-8-10-2015-final-reports-9789264241244-en.htm Aligning Transfer Pricing Outcomes with Value Creation, Actions 8-10 - 2015 Final Reports] ("OECD actions 8-10") at para. 6.146.</ref> requiring use of valuation methods based on profit projections.<ref>OECD actions 8-10 at para. 6.153.</ref>
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