Transfer Pricing Benchmarking Services

The process of studying various sources such as commercial databases to identify potential external comparables is known as Benchmarking studies, that must form an integral part of your transfer pricing structure and design. Multinational enterprises (MNEs) need to hire the best transfer pricing benchmark services in the UAE to make sure they are on the right track when it comes to transfer pricing compliance.

Benchmarking studies are used by MNEs or associated enterprises to identify an arm’s length range of prices to compare the prices in the controlled transaction with such a range. However, as with any other transfer pricing service in the UAE, benchmarking can’t be treated as a Do It Yourself (DIY) practice.

A transfer pricing benchmarking study comes with a diverse range of challenges such as lack of adequate comparable data or supporting evidence. Transfer pricing consultants in the UAE such as Tax Gian can offer you real solutions to navigate the challenges posed by transfer pricing benchmark study.

What is a transfer pricing benchmarking study?

MNEs and their associate enterprises use a benchmarking analysis or study to test the arm’s length nature of the related party transactions. Conducting a benchmarking study may help them in the following ways:

  • Prepare a transfer pricing documentation file
  • Set the mark-up attached to the transactions carried out between related parties
  • Determine the arm’s length range to provide an estimate of an arm’s length price

Tax Gian’s transfer pricing consultants can provide companies with reliable UAE transfer pricing benchmark services.

What is the purpose of transfer pricing benchmarking?

The key purpose of a benchmarking study in transfer pricing is to determine the general conditions related to the transactions performed by third parties on a given market. Conducting a benchmarking study helps you elicit a range of values such as the arm’s length range or mark-up range. Tax Gian offers benchmarking assistance as part of its UAE transfer pricing advisory services.

Key Steps in Performing a Transfer Pricing Benchmark Analysis

The answer to the question “How to perform a Transfer Pricing benchmarking study” can be encapsulated in the following steps:

  • Determine the years to be covered
  • Conduct a broad-based analysis of the taxpayer’s circumstances
  • Review the controlled transaction(s) under examination
  • Review the existing internal comparable (if any)
  • Determine the available sources of information on external comparables where such external comparables are required considering their relative reliability
  • Select the most appropriate transfer pricing method
  • Identify potential comparables
  • Determine and make comparability adjustments wherever appropriate
  • Interpret and use the data collected; determine the arm’s length remuneration

Why hire transfer pricing benchmark services in the UAE?

Hiring Transfer pricing benchmark services in UAE helps you properly price your MNE group’s intercompany transactions with similar transactions between unrelated parties in similar conditions.

The key objective of such a benchmarking study is to determine whether the company’s transfer prices are in line with the arm’s length principle. Arm’s length principle requires the transactions between associated enterprises (located in different tax jurisdictions) to be priced as if they were independent entities.

You can achieve the following goals by hiring the best UAE transfer pricing benchmark services:

  1. Regulatory compliance

Benchmarking studies are an essential part of the transfer pricing documentation file. Tax authorities may deem it a violation if you fail to prepare and submit such documentation or submit incomplete documentation (e.g. without benchmarking studies). We can help you avoid such a violation by assisting you in performing a benchmark study.

  1. Tax protection

A benchmark study is a key document that MNEs can use to establish their position as a taxpayer in front of tax authorities.

  1. Positive impact on business

A transfer pricing benchmark study helps you identify the prices/profitability in your segment of activity. This information can be used to define your strategic plans or to track the performance of a competitor.

Hire Tax Gian for Transfer Pricing Benchmark Services in the UAE

Tax Gian, a brand of Jitendra Tax Consultants (JTC), is the leading name when it comes to transfer pricing benchmark services in the UAE. MNEs and associated entities may need the help of a tax expert like Tax Gian as benchmarking involves complex activities such as collecting data on comparable transactions, analyzing market conditions, and selecting appropriate comparables to assess the appropriateness of the company’s transfer pricing methods. Tax Gian and its associate Jitendra Chartered Accountants (JCA) have been serving companies in the UAE for more than two decades. Associating with a highly experienced company providing transfer pricing services in the UAE will help you navigate the complex corporate tax landscape.

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