[INTM421080] Transfer pricing: Methodologies: OECD Guidelines: Transactional net margin method
Use of transactional net margin method
The transactional net margin method (‘TNMM’) and the profit-split method are described in the OECD Transfer Pricing Guidelines as the transactional profit methods (also called ‘other’ methods) for establishing the arm's length price. They concentrate on finding the arm's length net profit margin as opposed to the gross profit margin sought by the ‘traditional’ methods of CUP, resale minus and cost plus. The Guidelines consider TNMM at paragraphs 2.58 – 2.107.