Transfer Pricing

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ankitha (Querist)
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18 June 2009 Hello Friends,

I have a clarification on Profit Split method of TP and i am sure you all will be able to slove it.

Under PSM of TP, the combined net profit is apportioned both under Residual & Contribution analysis.

What does this combined profit stands for is it operating profit / Gross profit under both the analysis (combined & Residual)???

Waiting 4 ur replies

Thank you

Regards
Ankitha

taxindiaconnect

taxindiaconnect (Expert)
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18 June 2009 The established transfer pricing regulations suggest that the profits of the two entities engaged in the international transaction need to be spilt between the resident taxpayer and the associate enterprise. In the PSM the combined profit stands for the Operating net margins of both the parties are apportioned.