Non-residents working on the UK continental shelf: transfer pricing: determining the transfer price - approved methods
The OECD Guidelines list five methods for arriving at the arm’s length transfer price. These are:
- Comparable uncontrolled price method.
- Resale price method.
- Cost plus method.
- Transactional Net Margin (TNM) method.
- Profit split method.
There is no priority ranking of these, although if a comparable uncontrolled price can be found this is reckoned to be the most direct approach. Nor are they a matter of free choice: some will be more appropriate in a given situation than others. For consideration of the applicability of these methods to the circumstances of bareboat charters on the UK Continental Shelf, see OT43330+.