Article 7 - Approved Methods

A. The following are Approved Transfer Pricing Methods for purposes of Article 6 hereof:

1. Comparable Uncontrolled Price Method whereby a comparison is made between the price charged for property or services transferred in a Controlled Transaction to the price charged for property or services transferred in a comparable Uncontrolled Transaction.

2. Resale Price Method whereby a comparison is made between the resale margin that a purchaser of property in a Controlled Transaction earns from reselling that property in an Uncontrolled Transaction with the resale margin that is earned in comparable Uncontrolled purchase and resale Transactions.

3. Cost Plus Method whereby a comparison is made between the mark up on those costs directly and indirectly incurred in the supply of property or services in a Controlled Transaction with the mark up on those costs directly and indirectly incurred in the supply of property or services in a comparable Uncontrolled Transaction.

4. Transactional Net Margin Method whereby a comparison is made between the net profit margin relative to an appropriate base (e.g. costs, sales, assets) that a Person achieves in a Controlled Transaction with the net profit margin relative to the same base achieved in comparable Uncontrolled Transactions.

5. Transactional Profit Split Method allocates to each related Person participating in a Controlled Transaction the portion of common profit (or loss) derived from such Controlled Transaction that an Independent Person would earn or expect to earn from a comparable Uncontrolled Transaction. When it is possible to determine an Arm’s-Length remuneration for some of the functions performed by the Related Person in connection with the Controlled Transaction using one of the Approved Methods, the transactional profit split method shall be applied based on the common residual profit that results once such functions are so remunerated.

B. The methods set forth in paragraph (1) herein shall not be deemed to be enumerated in any particular order of preference. The Authority may from time to time set forth any relevant information regarding the selection of an appropriate Transfer Pricing method in the Guidelines.