Comparability Adjustment of Market-Specific Features for Transfer Pricing

In dealing with transfer pricing regulations, discussion of market premiums, location savings, and other local market features (Location-Specific Advantages; LSAs) can be controversial between taxpayers and tax authorities, and their financial impact tends to be significant.

Many taxpayers may argue that LSAs are the primary reason when the tested party’s result falls outside the arm’s-length range. However, taxpayers’ attempts to develop concrete arguments often lack persuasiveness by only providing qualitative explanations or referencing materials that lack direct relevance.