Determination of the Arm’s Length Profitability for Commissionaires – Use of Working Capital Adjustments

Daniela Baluchová

Abstract

Due to lack of information on comparable companies, transfer pricing practitioners deal with a problem how to benchmark entities having very limited functional and risk profile (ie commissionaire; toll manufacturer etc.). This paper demonstrates the application of the working capital adjustments for determining the arm’s length profitability of a commissionaire using formulation as presented in the work of Miesel and Verma (2001). Subsequently, critical aspects to be considered when applying working capital adjustments are discussed.

Relevant Publications in Global Journal of Commerce & Management Perspective