Cost Plus Method

Cost Plus Method

Cost Plus Method is.

one of five methods for determining an arm's-length price for tangible asset transfers. The arm's-length price is equal to the controlled party's cost of producing the property, plus a gross profit markup.

U.S. and other Developed Countries International Tax Meaning

A transfer pricing method using the costs incurred by the supplier of property (or services) in a controlled transaction. An appropriate cost plus mark up is added to this cost, to make an appropriate profit in light of the functions performed (taking into account assets used and risks assumed) and the market conditions. What is arrived at after adding the cost plus mark up to the above costs may be regarded as an arm's length price of the original controlled transaction.

See Transfer Pricing in the United States Encyclopedia of Law and Transfer Pricing in the International Encyclopedia of Law.


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