TPED members Bert Steen, Sébastien Gonnet, Christof Beuselinck, Matthias Petutschnig and Thibaut Roques (not a TPED member) published “Transfer Pricing Comparables: Preferring a Close Neighbor Over a Far-Away Peer?” in the Journal of International Accounting, Auditing & Taxation.
In the article they study country and firm characteristics for international transfer pricing comparables.
Their work highlights that Country-risk explains the operational profitability of a company better than its geographic region. This supports expanding the current regional scope of comparables searches to a global level, provided that country risk is controlled for.
In the absence of proper country risk adjustments, developing countries may receive too little tax revenues when using traditional comparables.
Read the full article here: Steens, B., Roques, T., Gonnet, S., Beuselinck, C. & Petutschnig, M. 2022. Transfer Pricing Comparables: Preferring a Close Neighbor Over a Far-Away Peer? Journal of International Accounting, Auditing & Taxation 47 (June 100471): 1 – 18.