within our group we have installed the cost plus method as regular transfer pricing method for all manufacturing and service providing entities that do only intercompany transactions. For calculating the markup we have made a internal survey of all functions and risks for the entities in our global value chain. Based on this survey we have clustered the intercompany manufacturer and service provider very roughly in "high-middle-low" functional entities. "High" means the entity gets a higher mark up (up to 6%), "low" means corresponding a low markup (3%).
We actually use no benchmark studies for proofing our markups as arm´s length conform, as we rely on our experience and stay in a range from 3-6%. For us, benchmark studies as a possible way of proofing the arm´s length principle, but no legal obligation. Until now we had no big issues in the fiscal audits in countries where we have intercompany manufacturer, with the exeption USA, where we headed for an APA.
Now I want to clarify our point of view about the legal situation regaring benchmark studies. Does anyone know in what specific countries the local fiscal authorities have the set benchmark studies as legal / statutory obligation for the transfer pricing calculation and evidence of the arm´s length principle? Or is there any survey existing, for example from the OECD?
Thank you and kind regards