Corporate Tax Planning: Impact of COVID-19 and Transfer Pricing: Approaches for Comparability Adjustments

The impact of the COVID-19 pandemic has varied significantly across market sectors and companies, disruptions generated by have had major implications for transfer-pricing practices many multinationals. crisis challenged efficiency traditional benchmarking profit margins markups on basis profitability comparable companies. In this article, we provide a framework addressing two key questions: (1) how to ensure that data used setting or testing results are appropriate in terms comparability they adequately reflect economic reality tested party; (2) what adjustments need be made if party's fall below arm's-length range. Given extraordinary circumstances, cannot rely simple analysis historical adjust faced businesses as result COVID-19. For example, situations where taxpayer's been affected greater extent than approaches outlined article will taxpayer with an estimated range companies is calibrated results. These aligned guidance issued Organisation Economic Co-operation Development December 2020.