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12.4.2. Specific TP Issues

Intragroup Services

From accounting period beginning on or after 1 January 2021, certain factors should be considered for intragroup service transactions to be deemed at arm’s length, including:

  • The service fee is charged for a service actually rendered;
  • The service provides or is rendered to provide the recipient with an economic or commercial value;
  • The fee is charged for services that an independent person in comparable circumstances would have paid for such services if performed by an independent person or performed in-house for itself; and
  • The fee charged would have been charged and accepted by independent parties for such services.

It is clarified that transactions pertaining to remunerations for services benefitting shareholders or partners of the company are not considered at arm’s length.

Intangible Property

For accounting periods beginning on or after 1 January 2021, the determination of the arm’s length conditions for controlled transactions involving the exploitation of an intangible property must consider functions involved in the development, enhancement, maintenance, protection, and exploitation (DEMPE) of intangibles, assets employed, and the risks assumed. Transactions relating to the sale, transfer, or grant of use rights of intangibles, consideration will be given to the benefits, geographical limitations, specifications, and the right to develop the intangibles.