Tipi Tips #9: What is the internal comparable uncontrolled price method?

Today’s topic is the internal comparable uncontrolled price method.

One of the transfer pricing methods is the internal comparable uncontrolled price method. We will use a seller of apples as a common example for each method. A seller of apples may sell apples to random clients as well as related parties. If the seller sells a batch of apples to a related party, we have a transaction which we have to check for its transfer pricing.

The internal CUP method simply means that we look at the price we charge a random client as well as a related party, and compare whether the product and price are similar. We literally want to compare apples with apples. For instance, we see whether the apples are of the same type and of similar quality. If that is the case, then we can copy paste the price to the transaction with the related party.

That is the internal CUP method in action.

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