Comparable uncontrolled price method
The comparable uncontrolled price method sets an intra-group transfer price directly from the price charged in a similar transaction between independent parties, adjusted for any material differences between the two deals.
FrameworkOECD Transfer Pricing Guidelines
See it move
An independent supplier sells the same grade of steel to unrelated customers at €620 per tonne on standard 30-day terms. A related-party sale is made on extended 60-day terms, which market evidence shows normally commands a 1.5% discount, or €9.30. Adjusting the comparable price for that difference gives €610.70 per tonne, the arm's-length transfer price for the intra-group sale.
Check yourself
An independent seller sells an identical grade of aluminium to unrelated buyers at €1,450 per tonne on standard cash terms. A related-party sale within the group is made on extended 90-day credit, and market evidence shows a 2% price discount is normally given for that extended credit term. Using the comparable uncontrolled price method, what transfer price should be used for the intra-group aluminium sale?