Transfer price is “the price in the Open Market”. The standards used to calculate this price, are well-known worldwide. These standards are called “Transfer Price Standards” and they include the Internal Revenue Code of the United of America, The Cooperation and Development Organization guidelines about transfer prices and the guidelines for multinational corporations and tax management issued on 27/6/1995. Both regulations set forth the prices specified for the internal transactions performed among subsidiaries of a multinational corporation and its head office, or among subsidiaries, or all cross-border transactions carried out by a multi-entity corporation individual entities among themselves. The main principle ruling these transactions states that the price must be set as if the parties were unrelated. This is known worldwide as “arm’s length principle”.

Pursuant to Argentinean legislation, transfer prices must be set in the following cases:

• When a corporation carries out a commercial transaction with a company based abroad, even if both entities are not related, the transfer price must be determined by the statutory methods when the company cannot offer evidence showing that the wholesale price in the country of origin or the importing country –as the case may be- is not common knowledge, or when there are doubts about whether or they have the same price as similar or equal imported or exported goods, or when there are difficulties –arising from any other reason- in understanding the price.

• Transactions carried out among entities based in our country, the corporations and trust funds and individuals or related corporations incorporated, domiciled or located abroad.

For these purposes, the most suitable methods will be used: comparable prices among independent parties, resale prices set among independent prices, cost plus benefits, profit splits, and net margin, in the way and through the methods established in the respective regulations.

In order to carry out a thorough economic analysis and to prepare our reports, our Firm has build a inter-disciplinary / multi disciplinary team. This is one of the features that distinguish us and add value to our “Report on Transfer prices”. Another distinctive feature, is our direct access to the AFIP- Aduana 1 Mercosur online date bases, as well as F.D.A. U.S.A an other data bases that guarantee an authentic and verifiable price information and formation. The use of specific methodology for price determination, comparability and justification is carried out directly on the situation of the local entity, pursuant to the regulatory frame.

1 AFIP: Federal Adimistration of Public Funds, similar to the I.R.S. in the U.S.A.
Aduana: Customs

Services include:

Preparation of a report taking into account the following aspects:

a) company’s activities and operation.

b) assumed risks and assets used by the tax payer in the performance of the said activities and operations.

c) detailed accounts of the elements, documents, circumstances and facts assessed in order to analyze and study transfer prices.

d) detailed accounts and quantification of the transactions performed, if they are under the Transfer Price regulations.

e) identification of foreign entities with whom the declared transactions were carried out.

f) method used for the justification of transfer prices, indicating the reasons of and grounds for the use of the method selected for each transaction.

g) identification of each of the comparable prices selected for the justification of transfer prices.

h) identification of the sources of information from where the comparable prices were taken.

i) detailed accounts of the comparable prices that were discarded, and the grounds for their selection.

j) details, quantification and methodology used to performed the necessary adjustments on the selected comparable prices.

k) determination of the median and the inter-quartile range.

l) transcription of financial statements of the comparable subjects related to the fiscal years that are necessary to perform the comparability analysis, indicating the information source used.

m) Description of the business activities and features of the business of comparable companies.

n) our conclusions.

• Certifications issued by an Independent C.P.A., authenticated by the Professional Council which will include the results of the intervention.

• Preparation of tax returns related to the transactions on a biannual basis.

• Attention to inspections and replies to the requirements related to the reports.