Question

What is the similarity and difference of traditional Transfer-Pricing Method and Transactional Transfer-Pricing Method?

What is the similarity and difference of traditional Transfer-Pricing Method and Transactional Transfer-Pricing Method?

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Answer #1

Difference

  • In traditional transfer pricing method there are 3 methods while in transactional transfer pricing method there are 2 methods
  • Traditional transfer pricing method consists of CUP method , cost plus method and resale price method while transactional transfer pricing method consists of net margin method and profit spilt method

Similarly

  • Both the methods helps in reducing the exchange exposure
  • After tax profits are maximised in both the methods
  • Helps in reducing the custom duty payments
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