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in (Malaysian) IRBM Transfer
Pricing Guideline 2012
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Cases applicable:
Only applied for end product distributor to [buy] and [selling] of product to
different parties.
The usefulness of the method largely depends on how
much added value or alteration the reseller has done on the product before it
is resold, or the time lapse between purchase and onward sale. , RPM focus more on functions
performed compared to product characteristics.
The starting point
in the resale price method is the price at which a product that has been
purchased from an associated enterprise is then resold to an independent
enterprise.
Formula,
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Arm’s length price
= Resale price – (Resale price x Resale price margin)
* Resale price
margin = (Sales price - Purchase price)/Sales price
Note: * Resale
price margin must be comparable to margins earned by other independent
enterprises performing similar functions, bearing similar risks and employing
similar assets.
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Comparability Analysis
Factors which may influence the resale price margin
and other considerations when performing a comparability analysis include:-
a.
The
functions or level of activities performed by the reseller
b.
The
degree of added value or alteration the reseller has done
c.
Employment
of similar assets
d.
Product
similarities
e.
Differences
in the way business is managed may have an impact on profitability
f.
A
resale price margin will be more accurate if it is realized within a short time
lapse (longer time lapse may give rise to changes in the market, exchange
rates, costs etc.)
g.
Exclusive
rights given to reseller to resell the products
h.
Differences
in accounting practices
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