Comparable uncontrolled price (CUP) method

Tax Glossary Definition

Comparable uncontrolled price (CUP) method

Comparable Uncontrolled Price (CUP) Method – This transfer pricing method determines an arm’s length price by comparing the amount charged in a transaction between related entities with the price applied in a similar transaction between independent parties operating under comparable conditions.

Example: When a company sells products to its subsidiary, the CUP method assesses whether the price aligns with what would be charged to an unrelated buyer for the same or similar goods.

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